The question is a simple one of goal definition, specifically, "What policymaking goals should we be pursuing with regard to financial reporting standards?"
If we can't achieve consensus on specific policymaking goals, we have no realistic hope of achieving consensus on specific policies with regard to IFRS in particular or financial reporting standards in general. And if that's the case, the likelihood of us making good policy decisions is nearly zero.
In contrast, if we do achieve consensus on what we seek to accomplish through our policy decisions, it will be much easier for us to make good policy decisions with regard to financial reporting standards in general and IFRS in particular. We would also be far more comfortable with and confident in our decisions.
You may have some opinions about what our policymaking goals should be. I have some too, and so do lots of other folks who participate in the financial reporting supply chain. But I doubt that our opinions are all the same, and because there are many interested parties likely to have diverse opinions, building consensus on our policymaking goals will be challenging. So what will help us maximize our chances for success at consensus building? To me, it boils down to two things.
First, we should explicitly reject attempts by any one individual, organization, or interest group to dominate our goal-setting process. This includes discouraging the Securities and Exchange Commission (SEC) from persisting in its attempts to define IFRS policy goals unilaterally. There are far too many stakeholders who are independent of the SEC for the goal-setting process to revolve around the SEC. We'll be much better off if the preparer, auditor, academic, regulator, and investor communities are all engaged directly in the goal-setting process.
Second, we should strive to reach consensus on the desirable attributes of policymaking goals before focusing on the goals themselves. In other words, we should seek agreement on criteria that will help us assess proposed goals and identify which goals would be better for us to embrace than others. I have developed a set of such criteria, and I'll share those criteria with you in my next post.
In concluding this post, I say if we're going to argue about IFRS or any other public-policy matter involving financial reporting standards, let's argue about the ends first and the means second. Otherwise we'll argue forever without accomplishing anything. And as we've already learned, if any of us tries to define a path forward without having first obtained mutual agreement on our destination, what we're likely to end up with is a roadmap to nowhere.