Securities Commission joins global IFRS push

Database will encourage consistency in implementation of international financial reporting standards

A new database system has been launched that will allow securities regulators around the globe to track and share information about compliance with International Financial Reporting Standards (IFRS).

The SQL Server database, which has been built at the Madrid headquarters of the International Organisation of Securities Commissions (IOSCO), collects information on how these standards are being applied around the world. IOSCO is the international standard-setter for the securities industry.

Jane Diplock, chair of the New Zealand Securities Commission and of IOSCO’s executive committee, says the database allows regulators to both enter and share information about problems and non-compliance with IFRS.

“The database will allow us, as well as other regulators, to look at the ways in which the financial reporting standards have been analysed in other jurisdictions and ensure that we are congruent with that,” says Diplock.

The New Zealand Securities Commission is one of 44 regulators that have signed up to use the international database. She says compliance with IFRS can encourage overseas investment in a country such as New Zealand.

It is important that people investing in New Zealand are confident the financial reporting standards here are the same as those found internationally, she says.

For some years, New Zealand was seen as not participating in the global regulatory framework, which meant overseas fund managers were cautious of investing here, she says.

“[But now] New Zealand is seen as being in the mainstream of regulatory developments around the world,” she says. “We are in good shape.”

As countries change to IFRS it is a challenge to achieve consistency in interpreting and applying the standards, says local Securities Commission chief accountant Alastair Boult. The database is designed to help with that.

“Ideally everyone involved — the preparers of financial statements, auditors, and regulators — needs to take a common approach,” he says.

The database will also be assessed by IOSCO, says Boult. Any problems or “varying interpretations” will be referred to the International Accounting Standards Board, which is responsible for developing IFRS.

“The database is a valuable tool for easing regulatory requirements, particularly for companies which operate in a number of countries,” says Boult.

Another factor that could benefit New Zealand’s economy is a stronger trans-Tasman relationship, according to Diplock.

“We need that larger market,” she says. “We can’t do the work we need to do in exporting and developing our industry unless we are closely aligned with our very large partner across the Tasman.”

Disadvantages of such a relationship, such as New Zealand potentially losing too much power to Australia, have been suggested, but Diplock thinks these are more a product of globalisation.

“And these things will happen whether or not we get more closely aligned with Australia. What I think is important is that we have a seamless market across the Tasman, [making it] easy for people to do business.”

The mutual recognition of securities offers, which will be in place later this year, is a significant step towards a stronger relationship, she says. It will mean that issuers can offer the same securities in both countries, using the same documents and structure, which will make the process much easier.

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