G20 leaders were too quick to rip into accountancy rules
Although largely ignored by the mainstream media, accountancy was a key issue
at the last G20. Indeed, French President Nicolas Sarkozy warned he would refuse
any agreement unless accord was reached on a more unified framework of
international accounting standards.
The outcome was that the G20 called on standard setters to make immediate
progress towards a single set of high-quality global accounting standards. ACCA
supports the principles-based IFRS, because they bring transparency,
comparability and clarity to reporting. However, the wording in the communiqué
seems to allow for the US to continue the bilateral IASB/FASB convergence. In
their response to the G20, the IASB and FASB reaffirmed their joint approach to
the financial crisis and to the overall goal of seeking convergence between IFRS
and US GAAP.
G20 leaders also called on the IASB and the FASB to:
In response, the FASB and the IASB pledged to work quickly to replace
accounting standards for off-balance sheet and financial instruments accounting.
FASB and IASB also relaxed some parts of fair value or mark-to-market rules.
On the same day as the summit, FASB announced that it had voted to revise
accounting rules for first-quarter results. This was seen by some as a rash
ACCA believes the priority has to be effective enforcement of existing
regulatory measures. Making reactive announcements or rushing through new
legislation cannot be the answer. In areas such as accounting, over-prescribed
global measures could backfire. Issuing standards that result in mechanical
rule-following would be a recipe for disaster. Principles-based standard setting
and professional judgment have a vital role to play in supporting the economic
ACCA does not believe that fair value accounting caused the banking crisis.
The calls to suspend it are equivalent to sweeping the problems under the
carpet, risking a further undermining of the remaining confidence in the
Wyn Mears is director at