My imagined message to Trump from the IFRS Foundation

So this is what I wrote here just after Trump was elected:

  • I confess I see no hint of a “bright side” to this abomination. Have deeply-rooted anxieties ever settled on such a wretchedly unsuitable means of deliverance? It provides harsh evidence that the world is succumbing to irrationality and recklessness, regardless that its complexities and challenges have never required such collective focus and intelligence. There’s hardly an aspect of public discourse and policy-making that likely won’t be resultingly degraded over the next four years.

Maybe that was a bit overwritten (I was in a bad mood!) but it certainly wasn’t overly pessimistic: Trump’s pervasive moral ugliness, operational incompetence and intellectual emptiness, helped along by astonishing complicity from those who might have been expected to provide a brake or a balance, turn the news into a perpetual shower of filth, with an incalculable multi-faceted cost. For example:

  • Eighty percent of voters now believe the country is spiraling out of control, according to a new poll released by the news organizations this week, with a majority both pessimistic that the United States can return to normal before next year and worried that someone in their immediate family could catch the virus.
  • A third of Americans were showing signs of clinical anxiety or depression at the end of April, according to an emergency weekly survey of American households carried out by the Census Bureau to measure the pandemic’s effects. In early May, half of those surveyed said they felt “down, depressed or hopeless,” double the number who responded that way in a 2014 national survey.

Now, you can say that this is an accounting blog and that politics should be left out of it. But for as long as I keep this going, I want to periodically return to what I see as the most important point I can make here: in the long run, the survival of financial reporting depends on a rational governing environment. As I also wrote in that post-election piece:

  • If nothing else (and perhaps there really is nothing else), we can hope that puerility in one public sphere promotes greater acuity in another. For all the reasons noted above, and many others, making risk-appropriate capital allocation decisions with reference to any kind of long-term horizon will become more challenging than ever. It demands that organizations like the IFRS Foundation attain their highest-possible level of progressive, nuanced clarity, even if this only casts them as lonely, besieged lighthouses in a poisoned global sea…

Also a bit over-written, but not wrong in substance. It’s increasingly noted how stock prices appear disconnected from economic performance as a whole. You can find a summary of the apparent reasons for that in this New York Times piece – taken as a whole, they point to mechanics and cycles which swamp the subtle messaging of financial statement presentation and disclosure. I’ve observed before that the recent rush to grant blanket extensions in filing deadlines, such that in Canada for instance many companies acceptably delayed filing December 31, 2019 financial statements until mid-June, implicitly sends the message that financial reporting is something of a luxury that we can do without when things really get tough. And why would anyone bother to spend much time scrutinizing those filings once they’re delivered, when the world has so palpably moved on since the dates and periods they illustrate? If financial reporting is so crucial for informed decision-making, then the rush should have been to accelerate the delivery of relevant and reliable reporting about financial condition in the time of covid-19, not to push it off.

My overall point is that the IFRS Foundation can’t afford to take a tone of cultured passivity while tending to its strict mandate, because that’s a road to nowhere. I’m increasingly of the view that the Foundation should aggressively extend its influence not only into management commentary, but also into environmental reporting, and social and governance reporting too, and just about everything that’s on the table, because we can’t afford the fragmentation anymore, and they’re really all part of the same big questions: what investing opportunity does this entity represent?; can I afford to take that opportunity?; does it align with my values? And so on.

But also, the future of financial reporting depends on encouraging and nurturing those kinds of questions, and the rational engagement that gives rise to them. Since rationality (and science, and knowledge-based policy-making, and so on) are now themselves increasingly and cynically politicized, this leads me to conclude that an organization like the IFRS Foundation can’t, ultimately, remain apolitical – especially in the face of individuals and movements whose poisonous regressiveness can be objectively demonstrated, as much as anything can. We can be sure that Trump would be hostile to the IFRS Foundation, if he knew anything about it (I’m only aware of one typically ill-considered, mercifully short-lived venture on his part into the field of financial reporting). It is as certain that the favour should be returned. And so I come to a conclusion which, although completely supportable in my own mind, will probably find little agreement (and none where it matters): that it would be a great day for financial reporting if the IFRS Foundation were to articulate (perhaps not in these words exactly) the following sentiment: Fuck Trump.

The opinions expressed are solely those of the author (well, hopefully not entirely solely…)

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