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At IFRS Consulting, you specialize in complex accounting issues. What are some common challenges that companies tend to underestimate when applying IFRS?

S. S.: One of the most significant challenges that companies consistently underestimate is the fundamental shift from a rules-based approach to a principles-based framework that requires substantial professional judgment. Many organizations approach IFRS implementation with a compliance mindset, focusing on technical requirements rather than understanding the underlying conceptual framework that drives these standards.

The overarching principle of IFRS is to provide investors with decision-useful information that enables them to make informed investment decisions. This investor-focused perspective requires companies to look beyond mechanical application of rules and consider the economic substance of transactions and their impact on financial statement users. However, translating these high-level principles into practical application is far from straightforward.

Companies often underestimate the complexity of exercising professional judgment consistently across different scenarios while maintaining compliance with regulatory expectations. This creates a challenging dynamic where reporting entities must navigate between their auditors’ interpretations and regulators’ enforcement perspectives. Our role as IFRS consultants is to bridge these gaps, helping companies understand not just what the standards require, but how to apply the underlying principles in a way that serves all stakeholders effectively.

The conceptual framework connection is crucial here — without a solid grounding in the fundamental objectives of financial reporting, companies tend to focus on technical compliance rather than meaningful financial communication with their investors.

As someone deeply involved in both academia and practice, how do you see accounting education evolving? What skills and mindsets are most essential for preparing the next generation of CFOs, CAOs and financial controllers?

S. S.: This is indeed a profound challenge, particularly against the backdrop of the AI revolution that’s transforming our profession. In my view, we need to fundamentally reconceptualize how we teach accounting, returning to its most basic definition as the language of business.

Given this perspective, I believe the students who are best suited for today’s accounting education are those who have the potential to become tomorrow’s business leaders. This means that beyond the technical aspects of accounting education, we must focus on developing broader business acumen and strategic thinking capabilities.

For my university students, I ensure they receive comprehensive and deep content not only in traditional areas but also in technology, entrepreneurship, strategy, and innovation, alongside the regular curriculum of finance and law. This multidisciplinary approach is essential because future CFOs and CAOs must understand how accounting integrates with broader business strategy and technological developments.

The goal is to develop professionals who can think strategically about financial information rather than simply process it. They need to understand how emerging technologies impact business models, how entrepreneurial ventures create and measure value, and how strategic decisions translate into financial reporting requirements. This broader educational foundation enables them to serve as true business partners rather than just technical specialists.

Technology fluency is essential, but students must learn to leverage these tools to enhance their professional judgment and strategic analysis. They should be comfortable with data analytics, emerging technologies, and digital transformation while maintaining focus on the underlying business implications and stakeholder needs.

Professional judgment is central to IFRS, but often difficult to teach or standardize. How can we better develop this skill among younger professionals and ensure it’s used responsibly in practice?

S. S.: My approach to addressing this challenge centers on deepening understanding of accounting fundamentals and the conceptual framework while sharpening creative and critical thinking skills. Professional judgment cannot be developed through rote learning or technical memorization — it requires a sophisticated understanding of underlying principles combined with analytical thinking capabilities.

The method I employ with my students involves comprehensive case-based assessment. I design examinations consisting of ten business cases that students have never encountered before («UNSEENS»), requiring them to analyze complex scenarios and determine appropriate accounting treatment based on fundamental accounting principles. This approach forces students to apply conceptual understanding rather than rely on memorized rules or precedents.

This methodology develops several critical competencies simultaneously. First, it requires students to identify the economic substance of transactions and events, moving beyond surface-level technical requirements. Second, it demands that they articulate their reasoning process, helping them understand how professional judgment is exercised and communicated. Third, it builds confidence in applying principles to novel situations, which is essential for real-world practice.

The emphasis on creative and critical thinking is crucial because IFRS application often requires innovative approaches to unique circumstances. Students learn to question assumptions, consider alternative treatments, and evaluate the implications of different approaches for various stakeholders. This analytical framework serves them well when they encounter complex issues in practice where standard guidance may be limited or ambiguous.

Your articles on IFRSideas often provide in-depth insights into complex issues. How do you decide which topics to write about, and what kind of feedback do you receive from practitioners?

S. S.: My article selection process typically focuses on relevant issues that I encounter in practice and that concern me, or topics that are currently on the IASB’s agenda. I believe it’s crucial to address real-world challenges that practitioners face, particularly those areas where current guidance may be inadequate or where emerging issues create uncertainty.

What’s particularly important to me is analyzing these topics through a constructive critical approach that not only identifies problems but also offers proposed solutions. Rather than simply critiquing existing standards or highlighting deficiencies, I aim to contribute positively to the professional discourse by suggesting practical improvements or alternative approaches that could enhance financial reporting quality.

The feedback I receive from practice has been remarkable. Very often, my articles touch on distortions or challenges that senior auditors, finance professionals, and even regulators experience in their daily work. This resonates strongly with practitioners who recognize these issues from their own experience but may not have seen them articulated or analyzed systematically.

One of the most common responses I receive is practitioners asking when these issues will be resolved or corrected. I explain diplomatically that standard-setting processes take considerable time, and ultimately, like other aspects of life, we probably will never achieve a state of complete perfection. However, the ongoing dialogue and analysis help advance the profession’s understanding and may contribute to future improvements in standards or their application.

The practical relevance of these articles seems to fill a genuine need in the professional community for thoughtful analysis that bridges academic rigor with real-world application challenges.

In many jurisdictions, local GAAP and IFRS still coexist. What is your view on convergence vs. coexistence?

S. S.: I believe it’s appropriate for local standards designed for private companies (such as those we have in Israel) to align themselves as closely as possible with IFRS principles. From a cost-benefit perspective, it makes sense to provide certain reliefs or simplifications for private companies, but there must be underlying coherence with the fundamental IFRS framework.

This approach recognizes that private companies may have different reporting needs and resource constraints compared to public entities, but maintains conceptual consistency that benefits the overall quality and comparability of financial reporting. Simplifications should be based on legitimate cost-benefit considerations rather than fundamental disagreements with IFRS principles.

At the Israeli Accounting Standards Institute, this is exactly the approach we implement. We work to ensure that local standards for private companies maintain coherence with IFRS while providing appropriate accommodations for the specific circumstances and needs of private entities. This balanced approach allows smaller entities to benefit from simplified requirements while preserving the conceptual foundation that makes financial reporting meaningful and comparable.

The key is ensuring that any variations or simplifications are well-reasoned, clearly documented, and consistently applied. This transparency helps users understand the basis for different treatments and maintains the integrity of the financial reporting system while acknowledging practical constraints.

Finally, if you had the opportunity to reform one aspect of IFRS today — whether technical or structural — what would it be, and why?

S. S.: If I had the opportunity to reform one aspect of IFRS today, I would focus on what I consider the greatest weakness in current standards: the treatment of intangible assets, particularly those that don’t appear on the balance sheet.

It’s simply unacceptable that the accounting balance sheet can explain only such a small portion of the economic assets of modern companies. In today’s knowledge-based economy, a company’s most valuable assets are often intangible — intellectual property, brand value, customer relationships, technological capabilities, and human capital — yet our current accounting model fails to capture most of these critical value drivers.

Through my articles in IFRS Ideas, I’ve written about several concepts that could significantly improve the current situation while remaining consistent with fundamental accounting principles. For example, I’ve explored ideas for recognizing assets related to research and development costs, which currently receive inconsistent treatment that often fails to reflect their economic substance.

I’ve also examined the potential application of push-down accounting principles, which could provide better frameworks for recognizing and measuring intangible assets in various business combination and restructuring scenarios. These approaches could help bridge the gap between accounting measures and economic reality without abandoning the reliability and verifiability that are essential to financial reporting credibility.

The challenge is developing recognition and measurement approaches that maintain accounting rigor while better reflecting the economic assets that drive value creation in modern businesses. This requires innovative thinking about how we can reliably identify, measure, and report on intangible assets in ways that provide decision-useful information to investors and other stakeholders.

This reform would represent a fundamental advancement in financial reporting relevance while maintaining the conceptual framework’s emphasis on faithful representation and decision usefulness.