Adoption of global accounting rules will save industry billions of dollars a year through reduced capital and compliance costs, English ICA president Graham Ward told a group of business students at Harvard University.
Ward said: ‘Capital flow depends on investor perceptions of the local investment climate and the financial condition and governance practices of the enterprise in which the investment is to be made.’
Besides corporate savings, he highlighted the need for increased transparency to balance investment throughout the world.
‘Raising the level of accounting and auditing standards and global harmonisation is in the interests of investors and in the interest of firms and nations that want to grow by attracting long-term capital,’ he added.
Iosco, the world club of stock markets, and the European Commission this year endorsed a core set of international accounting standards developed by the International Accounting Standards Committee. The move has increased momentum for all the world’s countries to move away from national standards or US GAAP which is widely used by multinationals.
Ward said worldwide honesty and transparency in markets can only be achieved with the help of national and international standard-setters and regulators co-operation.
Most of the world’s nations have pledged to use global standards set by the IASC, except the US, Canada and Japan – three of the world’s most powerful economies. All listed companies in Europe must adopt global accounting standards by the latest 2005.
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