Here’s one of the IFRS Foundation’s wackier recent endeavours, as announced at the end of September:
- “The IFRS Foundation has today launched an online educational quiz as a free-of-charge resource for students, educators and other interested parties to assess their knowledge of the use of IFRS, the IASB as well as the Standards themselves. The online quiz has been developed by former IASB Member Paul Pacter and draws upon information available from the recently published IFRS as global standards: a pocket guide.
- Quiz participants will be presented with 10 true or false statements drawn randomly from 220 possible questions. The quiz is instantly graded with answers and explanations provided for the answers shown. The IFRS Foundation will also make the entire set of 220 Q&As available to accounting educators and trainers who are using IFRS as global standards: a pocket guide as a textbook. The quiz is provided as a convenience for interested parties. Completion of the quiz should not be considered as any form of certification of participants by the IFRS Foundation.”
I suppose the last sentence was considered a necessary caution, but can there be anyone out there who might in its absence have been inclined to proclaim him- or herself a certified IFRS expert, solely on the basis of obtaining a 7 out of 10 score from this exercise (this being the designated “passing grade”)? Nothing about it constitutes a rigorous test of knowledge, let alone aptitude, and a good chunk of the content seems trivially self-promoting. For example, even the most skilled IFRS practitioner in the world doesn’t need to know the address of the IASB’s headquarters, or the details of what is or isn’t available for free on its website. The assertions that “The profiles of IFRS adoption in 130 countries show widespread global adoption of IFRS, with very few local modifications” (true) and that “The IFRS Foundation has found that most countries in the world have modified IFRS before adopting that modified version of IFRS as their national standards” (false, but isn’t that basically the same question?) and that “Nearly 50 foreign companies whose securities trade in the United States file IFRS financial statements with the US Securities and Exchange Commission” (true) seem more like self-congratulatory flourishes than meaningful tests of knowledge (because, truly, what does it matter if someone can cite that off the top of their heads or not?)
Insofar as it engages with the substance of the standards, the material seems too basic and haphazard to assess anything. For example, I got “IFRS requires that share-based payment transactions, including the use of shares and share options, must be recognized in the financial statements,” which merely represents the simplest summary possible of IFRS 2. But then, on the quiz where that came up, I’d already been given “Because it is not possible to make a reliable estimate of the fair value of share options when they are granted to employees, under IFRS an expense is recognized and measured when the employee exercises the option,” the premise for which seems to presuppose knowing the answer to the later question. Of course, that’s just a quirk of random selection, but surely one that more careful design could have avoided.
The broader question is whether the IFRS Foundation should even be pretending, albeit in one of its presumably more light-hearted moments, that a true-false quiz is an appropriate way of engaging with IFRS. The limitations of such an approach to testing are well known of course, and Wikipedia concisely sums up the main one: “Multiple choice tests are best adapted for testing well-defined or lower-order skills. Problem-solving and higher-order reasoning skills are better assessed through short-answer and essay tests.” No doubt, some aspects of IFRS-related knowledge, like memorizing the address of its headquarters, are the very essence of both well-defined and lower-order skills, but those aren’t the aspects that make financial reporting a relatively highly paid and (one hopes) at least relatively respected line of work. Of course, I know this isn’t the IFRS Foundation’s only initiative in the area of education (although based on my brief scan of this area of the website, much of what else exists is rather patchy – for instance, as I write, the list of “IFRS Learning Resources” hasn’t been updated since March 2013). But by overselling the value of this trivial exercise, it only undermines its more sophisticated efforts elsewhere (the overselling extended to a subsequent release bragging about how, during its first week, the quiz “was taken nearly 6,000 times by people in 113 jurisdictions” – IASB Chairman Hans Hoogervorst calls this a “remarkable uptake,” but at an average of just 53 clicks per jurisdiction, “remarkable indifference” seems like an equally plausible interpretation).
One assumes the quiz is in part a stab at good-natured populism, meant to embody how every great journey of learning starts with a single step. But in this case, a test that focuses only on the single steps is comically inadequate to the demands of the broader quest. Risk-appropriate investment decisions are crucial to our collective well-being; providing accessible information that can meaningfully support those decisions is a noble calling, of significant complexity. There’s no virtue in pretending it’s easier than it is, least of all when the pretense is being pedaled by the leaders of the profession.
The opinions expressed are solely those of the author