In advance of the G-20’s September meeting in China, the International Federation of Accountants is calling on the Group of Twenty nations to make a plug for international accounting and auditing standards as part of a broader stand to pursue economic and regulatory stability.
IFAC produced an 8-page paper addressed to the G-20 to outline a vision for how to establish better governance across public and private sectors to drive global economic stability. That means greater transparency across all organizations to help restore trust in the institutions that form the basis for the world’s financial markets, says IFAC CEO Fayez Choudhury. “The global economic recovery is uneven, and social and political destabilization risks remain high in many parts of the world,” he said in a statement.
With an economy that is increasingly interconnected, achieving growth depends on improvements in integrity and transparency to restore trust in business and government alike, IFAC says, and the accounting profession plays a key role in achieving that kind of transparency in the global economy.
As a means of achieving that kind of transparency, IFAC is calling on the G-20 to take some specific positions, including stating support for international standards across all jurisdictions. That would include standards for accounting, auditing, professional ethics and education, and public sector accounting. IFAC also is calling on the G-20 to strengthen governance and to promote and adopt principles for good regulation.
IFAC lists the specific sets of standards it would like for G-20 to support: International Financial Reporting Standards, International Standards on Auditing, auditor independence requirements as written by the International Ethics Standards Board for Accountants, and International Public Sector Accounting Standards. With the exception of IFRS, which are written by the International Accounting Standards Board, the remainder of those international standards are written by boards facilitated by IFAC.
The Securities and Exchange Commission appeared in the late 2000s to be heading toward eventual adoption of IFRS in the United States, beginning with allowing foreign private issuers to file financial statements prepared under IFRS without reconciling to U.S. GAAP. After further study of how IFRS might work in U.S. markets, however, the SEC let the idea die without taking action.
James Schnurr, appointed chief accountant in 2014, created some new buzz around the idea when he raised discussion on whether companies should be allowed to file in both GAAP and IFRS in the United States, which might appeal to global companies that already prepare financial statements under IFRS to meet requirements in other countries. The SEC took no formal action on that idea either, and Schnurr is now on an extended medical leave.