Ten years after the financial crisis, how have IFRS changes the role of the CFO within organizations?
IFRS: Mission accomplished?
Since the inception of IFRS—the somewhat idealistic project of creating an internationally recognized accounting framework—IFRS have changed the paradigm for financial analysis and the use of financial information. The collective impact of individual new standards (IFRS 9, IFRS 15, IFRS 16) is an accounting evolution prompted by the fallout from the 2007 financial crisis. However, in conjunction with the need for a combined financial and risk dataset, IFRS have also sparked a revolution for the CFO function that goes far beyond accounting alone.
Back in 2008, less than a year after US subprime mortgages triggered widespread disruption to the global financial system, the balance sheets of financial institutions were burdened by assets that suffered rapid and major declines in value.
In reaction, financial institutions and/or governments often created “bad banks” to isolate such toxic assets, reduce leverage, and respond to increased demand for liquidity, thus hindering access to credit and draining liquidity out of the market.
Inside magazine issue 18, June 2018
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