Bringing transparency to financial reporting: towards an improved accounting framework in the aftermath of the credit crisis.

Abstract

The credit crisis, amongst other things, is a crisis of confidence. What was once considered a problem limited to losses on US subprime mortgages has now spread throughout the global fi nancial landscape. A lack of understanding of where these losses have landed has resulted in a significant downturn in financial and economic activity. Confidence will only return once investors are satisfied that the true extent and location of these losses has been fully disclosed. For this to be achieved –despite siren calls the contrary– the financial system requires greater, not reduced levels of transparency and disclosure. The International Accounting Standards Board (IASB) is mindful of its responsibilities, and its work in conjunction with the Financial Stability Forum (FSF) is aimed at improving financial reporting in a number of key areas.