The International Federation of Accountants has endorsed a set of proposals made at last week’s G-20 Summit of world leaders that aim to reform the global financial regulatory system.
The proposals were included in the G-20 Communiqué issued by the Group of 20 leaders at their London meeting.
The G-20 objectives are consistent with many of the recommendations that IFAC sent to the G-20 Working Groups prior to the London summit, such as a call for implementing the Financial Stability Board’s 12 key International Standards and Codes, which include International Standards on Auditing.
IFAC had also recommended making significant progress toward a single set of high-quality global accounting standards, making improvements in the international regulatory framework, and strengthening the roles of the International Monetary Fund and the World Bank.
“We support the G-20 in building a reformed international financial system,” said IFAC CEO Ian Ball (pictured) in a statement. “The accountancy profession will have a vital role to play moving forward, and IFAC will continue to emphasize the measures we suggested in our recommendations to the G-20 last week.”
Among IFAC’s recommendations were the adoption of International Public Sector Accounting Standards in all jurisdictions and the provision by the G-20 of sufficient resources to develop and disseminate implementation guidance for the global standards they support. IFAC also proposed strengthening the IMF's “Code of Good Practices on Fiscal Transparency” through the application of IPSAS support for the establishment of well-governed professional accountancy bodies in countries where they do not currently exist; continued support for the World Bank’s Reports on Observance of Standards and Codes initiative; the establishment of an international, principles-based threshold of competencies for senior financial officers in public interest entities; and that the G-20 ensure its actions are supportive of the small business sector.
IFAC is developing a further set of recommendations that builds on the proposals in the G-20 Communiqué. The communiqué called on “the accounting standard-setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards.”
The G-20 issued an additional document, “Declaration on Strengthening the Financial System,” which renames the Financial Stability Forum the Financial Stability Board and gives it the authority to review and advise financial regulators and standard-setting bodies. The declaration recommends that accounting standard-setters take a number of actions by the end of the year:
· Reduce the complexity of accounting standards for financial instruments:
· Strengthen accounting recognition of loan-loss provisions by incorporating a broader range of credit information;
· Improve accounting standards for provisioning, off-balance-sheet exposures and valuation uncertainty;
· Achieve clarity and consistency in the application of valuation standards internationally, working with supervisors;
· Make significant progress towards a single set of high-quality global accounting standards; and,
· Within the framework of the independent accounting standard-setting process, improve involvement of stakeholders, including prudential regulators and emerging markets, through the IASB’s constitutional review.
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