A global alliance of the chief executives of 10 accounting institutes has issued a report advocating more useful and less complicated financial reporting requirements.

The report from the Global Accounting Alliance, “Getting to the Heart of the Issue – Can Financial Reporting Be Made Simpler and More Useful?,” draws on interviews with financial regulators from the U.S., U.K., Australia, China, South Africa, France, the European Commission, and international bodies. The report covers topics such as the debate over principles-based vs. rules-based standards, the movement toward International Financial Reporting Standards, the threat of litigation, and the use of professional judgment. It also looks into the effect of the economic crisis on reporting.

“In the middle and latter part of 2008, the financial crisis really started to bite, and the apparent consensus on principles which had been evident at an earlier stage may need to be reassessed,” said the report. “Paradigms have shifted, and the roles of governments, regulators, investors, financiers and companies have shifted. Different perspectives may be emerging on the balance between market freedom and regulation, and on the role and effectiveness of financial reporting.”

The American Institute of CPAs is participating in an initiative to provide recommendations for further improving financial reporting and plans to host a GAA roundtable event this spring in New York.

“As policymakers pursue a more coordinated, global approach to regulation and market support, we in the accounting profession are continuing a dialogue on how to reduce complexity in financial reporting by moving toward globally accepted, principles-based financial reporting standards,” said AICPA president and CEO Barry Melancon (pictured) in a statement.

In addition to the AICPA, the GAA includes the leaders of the Canadian Institute of Chartered Accountants, the Hong Kong Institute of CPAs, the Institute of Chartered Accountants in Australia, the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants in Ireland, the Institute of Chartered Accountants of Scotland, the Japanese Institute of CPAs, the New Zealand Institute of Chartered Accountants and the South African Institute of Chartered Accountants.

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