Has Citibank’s vice chairman Bill Rhodes just saved international accounting
standards from a slow, lingering death?
It’s G20 week and everyone who’s anyone in politics, finance and economics is
in London to dream up ways of shoring up the global economy. For accountants
there is also a professional interest. What will happen to accounting for banks?
Not only that, but what will happen to international financial reporting
Many believe you can’t have a global solution to the crisis without global
accounting standards. What’s more, you can’t reform the accounting for banks
without international agreement, otherwise there would be huge inconsistency and
incomparability between countries.
So, last week, as the UK government was putting the finishing touches to the
agenda for the G20 shindig, a delegation of bankers, including Rhodes, an elder
statesman of economic and financial diplomacy, visited chancellor Alistair
Darling to remind him that, among other things, there’s no solution without
international accounting standards.
IFRS has become a real worry because the US authorities, especially new SEC
chief Mary Schapiro, have gone cold on the idea. Before last year’s Obama
victory the US seemed firmly on course to adopt IFRS by 2014. Schapiro’s
predecessor Christopher Cox was an internationalist who backed global standards.
Regulatory experts visiting the Accountancy Age offices last week expressed
deep concern for the progress of IFRS in the US, wondering whether it was
They said whatever the government might do to reform bank regulation would be
somewhat meaningless unless the use of international standards was guaranteed
and the US was on board.
But the appeal from Rhodes to Darling to use his leverage and push home the
international standards agenda must mean the worry is more widespread.
Rhodes, 76, has worked for Citibank since 1957 and is vice chairman of the
Institute of International Finance.
In the 1990s he headed the advisory committee of banks that negotiated debt
restructuring programmes for Argentina, Peru, Brazil, Mexico and Uraguay. He has
advised president Thabo Mbeki of South Africa and Uribe of Columbia. He is a
member of the US Council on Foreign Relations. You just don’t wheel out Rhodes
unless you really want to get your point across effectively.
He wasn’t alone. Significantly, and among others, Peter Sands, CEO of
Standard Chartered was present. This is important because Sands was one of the
crisis cabinet who last year helped draw up bail-out plans for the banks after
the collapse of Lehmans.
What will happen?
The G20 will meet. It will put out a communiqué that will commit everyone to
work together on a global plan.
But it’s also likely that such a statement will leave wiggle room for key
players. Everyone has been so focused on national rescue operations, it’s
anybody’s guess whether they have had time to seriously consider how everyone
It’s worth bearing in mind international accounting standards are the only
piece of global rule-making currently in existence. It would be folly to let
them recede into the background. A point underlined by the delegation Rhodes was
One thing is certain. Even if this week’s G20 produces nothing substantial,
it will meet again. You must make people believe you’re working towards
something, even if not much is happening.
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