Investors need transparent, reliable financial information, particularly in times of heightened economic uncertainty, the International Organization of Securities Commissions (IOSCO) stressed today.
In a statement, the umbrella group of global securities regulators, which oversee the enforcement of accounting standards, highlighted the importance of high-quality financial reporting.
“The application of accounting standards must result in issuers providing clear, reliable, transparent and useful information to allow investors to make informed investment decisions,” it said.
The group said that it remains committed to consistent adherence to high-quality standards, “which are of critical importance to the proper functioning of the capital markets — especially in times of uncertainty.”
In particular, IOSCO said that it welcomed recent guidance from the International Accounting Standards Board on accounting for expected credit losses amid the economic fallout created by the Covid-19 outbreak.
“High-quality financial reporting requires the application of professional judgment to an issuer’s particular circumstances,” it said, noting that the accounting standards in this area are principles-based.
IOSCO also stressed that firms must consider the efforts of governments and regulators to provide temporary relief to financial institutions, businesses and households — including debt payment holidays, loan guarantees and other measures to ensure liquidity.
“Issuers should evaluate the implications of these government-backed relief programs and economic forecasts when assessing whether there is a significant increase in credit risk,” it said.
Additionally, the disclosure requirements in global accounting standards (IFRS) “should result in disclosure that considers the impact of these important emerging issues,” IOSCO said.
“Issuers should include robust disclosures of material information that can provide much needed transparency to users of financial statements,” it said.