KARACHI (July 06, 2010) – The global body for accountants, ACCA (the Association for Chartered Certified Accountants) has responded to last week's G20 meeting by saying that its “pillars for agenda reform” are built on shaky ground.
The G20’s first pillar – a strong regulatory framework, and the third pillar – resolving issues to do with financial institutions in crisis – are particularly unsteady and lack real global co-ordination, says ACCA, highlighting the fact that no decision was agreed on a global bank tax.
The second pillar – effective supervision with stronger rules, more effective oversight and supervision – also fell short, and ACCA is disappointed at the lack of any reference to the previous pledge for a 2011 deadline for international agreement on accounting standards. This risks losing high-level impetus on this crucial area of action to facilitate international business.
The final pillar – transparent international assessment and peer review, strengthening their commitment to the IMF/World Bank Financial Sector Assessment Program (FSAP) and supporting robust and transparent peer review through the Financial Stability Board – means that the G20 is looking to review issues, discuss them and be vigilant. ACCA says that consultation is vital in the coming months.
Despite the shaky foundations, ACCA is particularly pleased that the G20 examined sustainable public finances, emphasising the need for countries to put in place credible, properly phased and growth-friendly plans for fiscal sustainability.
Mr Arif Masud Mirza ,Head of ACCA Pakistan , says: “Real co-ordinated action was missing from the Toronto meeting; the International Monetary Fund (IMF) has warned that an unintended consequence of this lack of real co-ordination could mean the loss of millions of jobs and $2.25trillion in global output being at risk.”
Mr Mirza adds: “Stability is crucial ahead of the next meeting in Seoul later in the year and there is a real risk that complacency could plunge the global economy back into danger. ACCA recommends that while recent indications of economic expansion give cause for cautious optimism, it is too soon to abandon stimulus programmes. Before any withdrawal of stimulus, there must be a complete exit strategy in place.”
ACCA also notes that current demand in many major economies is sustained by exceptional policy measures. While this unprecedented intervention averted a much worse crisis, governments must now devise credible, medium-term plans to address the shortfalls in public finances arising from reduced tax yields and their necessary erstwhile support.
Mr Mirza concludes: “ACCA believes G20 leaders must make best use of the information available to them to assess the current economic conditions and carefully consider the need for further global fiscal stimulus.”
The next summit is in Seoul, Korea, on November 11-12, 2010.