The Financial Crisis Advisory Group has published a report concluding that accounting standards are not to blame for the economic crisis.

The group came together at the request of the International Accounting Standards Board and the U.S. Financial Accounting Standards Board and includes prominent members with broad experience in the international markets. Co-chaired by Hans Hoogervorst, chairman of the Netherlands Authority for the Financial Markets, and Harvey Goldschmid, former commissioner of the U.S. Securities and Exchange Commission, the group has met six times this year to discuss ways for the accounting profession to deal with the financial crisis.

“Accounting was not a root cause of the financial crisis, but it has an important role to play in its resolution,” said Hoogervorst in a statement.

The report covers four main areas: effective financial reporting, the limitations of financial reporting, the convergence of accounting standards, and standard-setter independence and accountability. It also includes a series of recommendations, many of them calling for the adoption of or convergence with International Financial Reporting Standards.

In explaining the financial crisis, the report describes the importance of recognizing the inherent imperfections of the financial reporting process, and how investors need to look beyond the numbers, which only capture information about the performance of a business over a finite period of time.

“It is important to realize that no accounting standard could have accounted in a timely fashion for the enormous effects of the economic shock that has engulfed the world,” said the report. “This clearly belongs to the domain of economics, despite the fact that surprisingly few economists (or policymakers) foresaw what was coming.”

The report also criticizes attempts by politicians to interfere in the standards-setting process, as happened to both the IASB and FASB with fair value and mark-to-market accounting standards. “While, as part of the system of public accountability, policymakers can and should voice their concerns and provide input to standard-setters, we urge them to refrain from seeking to prescribe specific standard-setting outcomes,” said one of the report’s recommendations. “Such restraint is important in maintaining public confidence in the independence of the standard-setting process, and, thus, in financial reporting and the financial system as a whole.”

To protect the IASB’s independence from undue influence, the report also recommends that the board have a permanent funding structure under which sufficient funds are provided on an equitable, mandatory basis.

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