The time has come to ‘publish what you pay’

The International Accounting Standards Board’s Canon Street headquarters was
under siege earlier this month. A brigade of placard waving Christian Aid
protesters picketed it, accusing it of promoting international tax evasion and
robbing developing nations of critically needed funds.

The group wants the IASB to implement “urgent reforms” which would order
companies to report profits and taxes on a nation-by-nation basis. We’re used to
seeing humanitarian and financial objectives collide in spectacular fashion on
the streets, usually involving riot police and batons.

But there was no clash here. This was a situation where, oddly enough,
humanitarian and financial goals might almost be aligned. Christian Aid, and the
Publish What You Pay consortium, want to know how much companies pay in tax to
developing nations. Analysts also want to know this to be able to calculate how
much risk these companies are carrying.

Inside the IASB HQ, a team led by Australian Glenn Brady is putting together
a consultation paper on the subject to be released next year – although it is
focusing exclusively on extractive industries. We’ve got to wonder what this
means for accountants who, by and large, work diligently to provide the best
information for financial stakeholders. The idea of the free roaming accountants
shining a light into the dark corners of the world has some appeal and may
change the robotic beancounter stereotype. However, for the IASB, any outcome
would need to be based on solid financial principles.

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Fiona Westwood of Smith and Williamson.