The chief executives of the six largest accounting firms pushed for global convergence of accounting standards, better audit quality and principles-based accounting standards at a symposium.
They issued a report about a roundtable discussion they had been conducting on topics such as the convergence of international financial reporting standards with U.S. generally accepted accounting principles. They favored broader principles-based standards like IFRS over rules-based standards like GAAP.
“Most notable was the near-universal support expressed for moving toward the global adoption of a single set of high-quality global accounting standards,” said the report. “Support was also expressed, albeit with somewhat less passion, for more consistent audit and independence standards, and to a certain extent regulatory oversight across borders.”
The heads of the firms emphasized the need for a unified approach at the Global Public Policy Symposium in New York. “You need to consistently execute against a global set of accounting standards,” said Timothy Flynn, chairman of KPMG International.
They also saw the need for all the necessary sides to come together in support. “Implementation can only happen with the participation of everyone,” said Frans Samyn, CEO of BDO International.
The roundtables also focused on building greater consistency in audit quality across markets. The accounting firm leaders noted the importance of adopting one universal set of independence standards to help avoid complications associated with multiple definitions of auditor independence.
The CEOs also proposed a framework for establishing principles-based accounting standards. While the participants in the conference still saw the need for accounting rules, they favored more of a move toward principles and the use of reasonable judgment. They advocated a faithful presentation of economic reality, while being responsive to users’ needs for clarity and transparency.
Conrad Hewitt, chief accountant of the Securities and Exchange Commission, said he was already talking with SEC Chairman Christopher Cox about the issue of setting up a safe harbor for professional judgment.
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