This is from a recent speech by IASB Chair Andreas Barckow:

• Imagine a world without IFRS Accounting Standards. Companies’ reporting would likely be a patchwork around the world. Not very comparable. Perhaps not very transparent. Maybe not useful at all. Each jurisdiction would have their own requirements. Those requirements may overlap or resemble those in other jurisdictions—or they may be totally different.
• A company listed on a stock exchange—or on several stock exchanges—would have to prepare multiple sets of financial statements. It would take up a lot of time; preparing financial statements is a big task.
• Investors with the desire to invest in overseas companies would need to learn several different reporting systems. They would have to figure out to what extent information reported in one jurisdiction is comparable with information reported in another. They would have to adjust companies’ numbers to compare them. Even after all this research and analysis, investors might only be able to compare apples with oranges rather than apples with apples—perhaps unknowingly.

That “apples with apples” line might easily trigger another edition of our periodic series, Great Cliches of IFRS. For instance, the following is from 2011:

• (FASB and the IASB) agreed to “use their best efforts to issue an exposure draft of proposed changes to U.S. GAAP or IFRSs that reflect common solutions to some, and perhaps all, of the differences identified for inclusion in the short term project during 2003”…They then would work long term to remove the remaining differences that would still be in effect.
• Another way of putting this would be that it is sort of like comparing things like apples to apples. If one is looking at a banana and trying to compare it to an apple it just isn’t possible to have an exact comparison. They are completely different in shape, however they are both fruit. So this is similar in a more layman’s term, of what they are trying to accomplish. My way of looking at this is that they are both basically trying to become oranges.  They could be different types of oranges, but both at least be the same kind of fruit if not the exact same kind.

I don’t know if that last paragraph is entirely coherent, but the attempt is rather charming. And here’s one from 2022:

• IFRS fosters transparency and trust in the global financial markets and the companies that list their shares on them. If such standards did not exist, investors would be more reluctant to believe the financial statements and other information presented to them by companies. Without that trust, we might see fewer transactions and a less robust economy.
• IFRS also helps investors analyze companies by making it easier to perform “apples to apples” comparisons between one company and another and for fundamental analysis of a company’s performance.

I don’t know though, I’ve come to think it’s a silly phrase, and not particularly useful in illustrating the virtue of IFRS. You know what kind of person spends much time comparing an apple to an apple? An indecisive idiot, that’s who! If you only came to the market to buy a Golden Delicious, then the items on offer are probably all just about as good as each other, as long as you avoid the obviously rotted. In contrast, if you’re tempted by both apples and oranges but can only afford one or the other, then you have a decision on your hands (the former offers a quicker immediate bite, but the latter might be juicier and more refreshing once you get through the work of peeling it, and so forth). The value of IFRS might be better expressed (within this plainly over-extended metaphor) as a framework allowing you to rationally assess and conclude on the relative merits of all such options (bananas and grapes too!), whether or not that comes down to directly “comparing” them.

The age of IFRS has also been an age of broad economic and environmental degradation, a prevailing backlash against globalization and perceived “elitism,” an undermining of democratic norms, and multiple looming demographic threats, among further ills. I’m not suggesting of course that IFRS has somehow made everything worse, only noting that the economic barriers and frictions which it plays a small part in alleviating might not have been entirely malign (for example, in reflecting and bolstering the local cultural and sociological interests that gave rise to them over decades). And if IFRS had never been created, the challenges to (human) investors in quantitatively comparing different kinds of investment opportunities would likely be increasingly swept away by the greater capacities of artificial intelligence, allowing us another escape route from Barckow’s gloomy alternative reality (not that the contribution of AI is entirely positive either of course).

Oh well, there’s no going back now, no point in even toying with the challenge to try imagining a world without IFRS. So we’ll have to settle for imagining a world with fewer dubious fruit comparisons…

The opinions expressed are solely those of the author.