The G20 members’ meeting in London on 2 April 2009 must establish a new architecture for global financial and economic relations, says ACCA (the Association of Chartered Certified Accountants) in a discussion paper about the upcoming summit.
Arif Masud Mirza, Head of ACCA Pakistan, says: “The G20 have many problems to solve – how to cope with the increasing complexity of financial markets; how to strike a balance between financial innovation and the management of systemic risks; and what the role of global co-ordination of financial regulation should be.”
ACCA’s discussion paper “The G-20 summit, April 2009” says that the financial regulatory framework needs to be re-designed to cater for increasingly complex financial structures. Steps have to be taken to improve the transparency and stability of financial markets.
Arif Masud Mirza, Head of ACCA Pakistan: “Specifically, the G20 needs to endorse the benefits of International Financial Reporting Standards (IFRS) because they bring transparency, comparability and clarity to reporting in the interests of shareholders, business and the wider public. It is a major failing that IFRS are not already the global accounting language for all finance professionals.”
Mr Arif Masud Mirza adds: “Priority must be placed on ensuring that existing legislative and regulatory measures are implemented and enforced effectively. Rushing through large swathes of new legislation is not the answer. In areas such as accounting, over-prescribed global measures could backfire. Issuing standards that result in mechanical rule-following would be a recipe for disaster. Principles-based standard setting and professional judgement have a vital role to play in supporting business confidence and economic recovery.”
ACCA also states in its paper that global governance and the role of international financial institutions need to be subject to a rigorous review. World leaders will need to consider whether there should be a formal agreement to make global governance a long-term feature of the G-20 agenda.
Whilst Fair Value in financial reporting will also need to be considered by the G20, Mr Arif adds: “ACCA does not believe that Fair Value accounting is a cause of the banking crisis. The calls for its suspension can be seen as trying to sweep the problems under the carpet, which would, if allowed, risk undermining the remaining confidence in the financial system.”
A pdf of the full report can be downloaded from ACCA's website: