…we needed a Forum of firms

However, it is important to recognise that this is only one part of a three part plan. In isolation the forum will be positive, but it is only if matters are tackled comprehensively that we will see its potential realised.

The major reason for variation in practices across the world continues to be the existence of national rules and regulations which require those variations.

The International Forum on Accountancy Development, in which IFAC and the large accounting firms meet with representatives of a wide range of international financial institutions, regulators, standard setters and preparers and users of accounts, has a key role in encouraging countries to analyse the differences between national practices and international standards in accounting, auditing, corporate governance and regulation and in developing and implementing country action plans to eliminate those differences.

The profession is therefore looking to the other participants in IFAD, such as the securities regulators and the development banks, to work with it to push change at country level.

The third area in which action is necessary is within, and by, the firms themselves.

One example is the decision to include references to the nationality of accounting and auditing standards in the audit reports on accounts used internationally.

Actions specific to individual firms are also being taken.

The restructuring of IASC and the European Union decision to require the use of international accounting standards in the consolidated accounts of listed companies from 2005 are positive developments moving towards convergence in accounting and reporting.

I believe the establishment of the Forum of Firms combined with the actions of the participants in IFAD and the actions of the firms themselves can have the same positive impact in the auditing area.

No-one is going ahead believing that improvements will be put in place overnight but there is a clear recognition that the globalisation of the marketplace requires change and that with the active involvement of all the relevant parties that change is now possible.

  • Karl Ernst Knorr is chairman of the Forum of Firms.

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