There is a strange but persistent rumour that IAS 1 Presentation of Financial Statements was written by Sir Henry Benson (later Lord Benson), the first chairman of the IASB’s predecessor, the International Accounting Standards Committee (IASC). If true, this would have been a remarkable feat. Benson’s term as IASC chairman finished in 1976 and he died in 1995. The IASC didn’t finalise and publish IAS 1 until 1997.
Did Benson retain any influence at IASC after 1976? I don’t know, but I have never seen any sign that he had any involvement in the years leading up to 1994, when I joined the IASC staff. Also, Camfferman and Zeff don’t report any involvement by Benson in IASC’s work after 1976.
The people spreading this bizarre rumour may be confusing two successive Standards, both labelled IAS 1 but covering vastly different subject matter:
- IAS 1 Disclosure of Accounting Policies was published in 1974. As the title indicates, this dealt only with disclosure of accounting policies.
- IAS 1 Presentation of Financial Statements was published in 1997. This much more comprehensive standard prescribes many general aspects of how to prepare financial statements, and of presentation and disclosure in financial statements. (By general aspects, I mean aspects not relating to particular types of asset, liability, income, expense or equity). Later, the IASB itself made extensive changes to IAS 1 (1997) in 2003 and again in 2007.
By issuing IAS 1 Presentation of Financial Statements in 1997, IASC:
- produced a comprehensive standard on general aspects of preparing financial statements and on presentation and disclosure in financial statements. The level of detail in this new standard went well above IASC’s previous requirements and was comparable with the level of detail in the European Union’s Fourth Directive.
- added to its Standards material that IASC had previously included only in its Conceptual Framework (issued in 1989 as the Framework for the Preparation and Presentation of Financial Statements). When this material was in the Conceptual Framework, it was only descriptive, but once it came into a standard it imposed requirements.
- integrated into the new IAS 1 requirements drawn from 3 older standards that had covered only very limited aspects of the format and contents of financial statements: IAS 1 Disclosure of Accounting Policies (1974); IAS 5 Information to be Disclosed in Financial Statements (1976); and IAS 13 Presentation of Current Assets and Current Liabilities (1979).
Would it matter if Benson had written the version of IAS 1 published in 1997, or the revised versions published in 2003 and 2007? I don’t think so. But some people invented this rumour and keep repeating it, so evidently they think it does matter. Anyway, the factual timeline clearly disproves this absurd rumour.
Financial Reporting and Global Equity Markets: A History of the International Accounting Standards Committee 1973-2000, by Kees Camfferman & Stephen A Zeff (2007)
Have never heard the rumour, but nice rebuttal! Enjoy your blog
Good piece, Peter. The rumour is one of many ill-informed myths which ignores the realties of the world and, in particuar, standard setting.
Benson was a strong minded and assertive individual so I was not surprised to learn that he once put a revised draft of the original IAS 1 to the board (Camfferman and Zeff (p. 94). Other board members and staff did the same. So attributing IAS 1 to one individual is grossly misleading. It ignores that the resulting standards are issued only after a board process and decision. It also ignores the high level of agreement that was probably evident across the board on the requirements of the original IAS 1. (I would argue the same for many other standards but that is a subject for another day.)
As you point out, the 1997 version of IAS 1 combined IAS 1, 5 & 13 (and the 4th Directive) into a broader presentation standard which reflected 1990s thinking. It went well beyond the previous requirements and, indeed, the “basic standards” that Benson always wanted. And, of course, IAS 1 (1997) has been been significantly modified later by the IASB.
In spite of all these revisions, there are probably some of Benson’s ideas lurking in the current version of IAS 1 but they are there not because they were written by Benson but because later boards have wanted and approved the same ideas, the ideas are widely supported, and the ideas have stood the test of time. (Accounting isn’t as varied and complicated as some think but that is also another subject for another day).
Throughout my time at the IASC (1985 to 1994), Benson maintained an interest in the IASC but didn’t follow in detail what we were doing. We didn’t ask his opinion on anything (let alone ask his permission!). He was the IASC’s founder and, hence, a respected elder statesman whom every chairman wanted to meet for dinner. At those dinners, Benson was inquisitive but he didn’t seek to influence the IASC either technically or politically. It was all very polite and friendly.