World party

‘Like motherhood and apple pie, the immediate reaction is that internationalisation is a good thing. But it will mean a serious loss of flexibility. It is very important indeed, as we move into a very rapid development in global accounting, that the UK is part of it.’

Roger Davis doesn’t pull his punches. As a result, he’s more effective at selling his baby, this week’s Coopers & Lybrand conference, The Future Direction of Accounting.

It sounds a somewhat portentous title for a two-and-a-half-hour session of speeches and discussion, but what the firm has pulled off is little short of a miracle: getting two hundred of the UK’s top financial directors and three of the world’s most important accounting regulators in the same room, at the same time.

And talking to each other. It’s like breaching the Berlin Wall.

As well as Davis and Coopers chairman Peter Smith, the speakers include Sir David Tweedie (Accounting Standards Board chairman), Sir Bryan Carsberg (secretary general of the International Accounting Standards Committee), James Leisenring (vice chairman of the US Financial Accounting Standards Board) and Hugh Collum (finance director at SmithKline Beecham). A glittering array indeed.

So why now? Stretching the simile even further, in accounting terms, the changes afoot at an international level are just about as momentous as the reuniting of Germany.

To quote Cooper: ‘The International Organisation of Securities Commissions is supporting work towards the universal acceptance of International Accounting Standards on the world’s stock exchanges by 1998. The International Accounting Standards Committee is accelerating its programme. It does so with the full support of both the US authorities and the European Commission, which recommends international harmonisation as a better alternative to accounting harmonisation within the European Union.’

Rumblings have already started ‘in the dining room’ among FDs over the increasingly technical nature of domestic regulation, and this is only likely to increase under the influence of overseas systems which tend to be much more legalistic. There is a strong sense, too, of concern that the more the profession becomes regulated, the more danger there is of losing touch with real commercial decisions.

Accounting principles first have to fit the way a competent board manages its business. And it’s not just about creating a new set of rules, but determining who should interpret them and how.

As Davis says: ‘David Tweedie needs to go to that international table with the weight of support of UK financial directors.’

For companies and institutions doing business overseas – whether investing in new markets, merging, acquiring, getting up close and personal with partners from the Tiger economies, seeking a listing on Wall Street – lying back and thinking of England just isn’t an option. It is essential that all those who are going to feel the effects of the internationalisation of accounting standards exert a constructive influence during the process or they’ll find themselves left with the regulatory equivalent of a lump of Soviet concrete – only not quite as useful.