The International Organization of Securities Commissions (IOSCO) published a statement today urging publicly traded companies to provide investors with clear and accurate information on the accounting standards used in the preparation of their accounts.

“IOSCO is concerned that, with the convergence of global accounting standards, investors may assume that all company accounts are generally comparable, even when they are prepared in accordance with quite different generally accepted accounting principles,” said Michel Prada, chairman of the IOSCO Technical Committee. This commonly occurs where national standards assert that they are based on but do not fully implement International Financial Reporting Standards, he added.

“In order to mitigate against the risk of investors making investment decisions without a full understanding of the bases of financial statements, we are recommending that all publicly traded companies include information which clearly explains the basis on which their accounts have been prepared,” Prada said.

Companies preparing annual and interim financial statements on the basis of national standards that are modified or adapted from IFRS should include: a clear statement of the reporting framework on which the accounting policies are based; a clear statement of the company’s accounting policies on all material accounting areas; an explanation of where the accounting standards that underpin the policies can be found; a statement that explains that the financial statements are in compliance with IFRS, if this is the case; and, a statement that explains how the standards and the reporting framework used differ from IFRS.