The G20 Summit in London next week could set financial and economic
decision-making in a new direction – to stronger, more sustainable and more
The global crisis has underlined the interdependence of everyone in the
market and the interdependence of nations. Building the new economic behaviour
we need will require joint responsibility and cooperation. This responsibility
is shared across financial institutions, investors, regulators and the
profession – as well as across consumers and wider civic society. This
cooperation must be truely global.
A key component in building a stable global economic market is establishing a
better system for identifying risk at a systemic level. The crisis has been
magnified by the lack of effective communication between governments,
regulators, businesses and investors. Auditors can play an important role here.
The crisis offers an opportunity to strengthen the relationship between bank
auditors and regulators by establishing regular communication to improve risk
Underpinning all this is the access to trustworthy, transparent information
that can be easily compared across country borders. In November, the G20 took a
leap towards establishing a global common financial language. But now what?
Changes at the SEC could mean that the anticipated 2011 decision on making
IFRS adoption mandatory is delayed. Mary Schapiro has said transition to IFRS in
the US ‘will take a back-burner’, with an overhaul of the regulatory system
taking centre stage. The message this sends out might encourage
Global reporting is at a crossroads. It is critical that the G20 commits to
IFRS as the global accounting language. Failing to grab this opportunity will
hamper comparability and reduce transparency – equivalent to shooting a future
global sustainable economy in the foot.
By agreeing principles that will help create long-term employment and prosp
erity, the G20 has an opportunity to send a powerful message to businesses –
that they should embrace new, sustainable business strategies that are in the
long term interests of the wider community, not just shareholders.
This will help restore confidence in the ability of businesses and open
markets, not just to tackle the crisis, but to play a part in addressing
poverty, disease and climate change.
Michael Izza is chief executive of the
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