[AS PREPARED FOR DELIVERY]
Ladies and gentlemen,
I would like to extend a warm welcome to all of you to the twenty-eighth session of the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting. UNCTAD is honoured to service such a forum, unique in the United Nations system in its dedication to promoting better corporate reporting.
Your main agenda item deals with the need for a coherent approach towards capacity-building in the area of corporate reporting. Given the implementation challenges posed by the proliferation of international corporate reporting standards and codes, this is indeed a timely discussion. By way of providing a broader context for your discussion on this topic, I would like to share some thoughts with you.
As most of you are aware, the leaders of the G20 countries have been urging the International Accounting Standards Board and the Financial Accounting Standards Board in the Unites States to complete their convergence projects by the end of 2011. While putting in place a coherent set of global accounting standards by the end of 2011 would have been desirable, the IASB has indicated that several key standards currently being developed will again be circulated to the public for further comments. This is indeed a wise approach - particularly from the perspective of developing countries and transition economies - which often lack dedicated resources to deal with the succession of Exposure Drafts that have been flowing from the IASB. Ultimately, the durability of the standards will depend on how broad a consensus can be achieved in their preparation - rather than how quickly the process can be finalized.
In recent months, the remaining overhangs from the financial crisis have demonstrated the close inter-relationship between the stability of the private and public sectors. We have also witnessed the ramifications of inconsistencies in the accounting and reporting of sovereign debt. If such inconsistencies can occur in highly developed economies with mature oversight mechanisms and deep financial markets, how would developing countries be able to avoid such unfortunate occurrences? The negative impact of these developments on investors´ confidence has been considerable.
In my view, having an adequate accounting infrastructure in a country is a critically important - and often overlooked - foundation for economic development. Many developing and least-developed countries in the world today lack some of the basic features of an accounting infrastructure. From weaknesses in their legal and regulatory frameworks, to a lack of human capacity and relevant support institutions. Each of you in this room today - experts in this area - are familiar with these challenges. You also know that strengthening individual and institutional capacities is a key determinant of a country´s ability to implement international accounting standards, attract and allocate capital, and promote economic stability.
ISAR has been addressing this subject head on. At your last session you developed a framework outlining the key aspects of an effective accounting infrastructure. And, over the next three days you will be focusing on a new tool to assess progress on capacity building in the area of accounting and reporting. Such a tool will be highly useful to many countries around the world. The ability to identify gaps and weaknesses is a first step towards prioritizing solutions. It allows development partners to better understand how they can be of most help to recipient countries wishing to strengthen their accounting infrastructure. It guides policy makers and practitioners to what needs to be done at a country level to ensure high-quality corporate reporting.
In the coming years, we will all need to work hard to strengthen the accounting infrastructure of developing countries and transition economies. For many years we have forecasted that these economies will emerge as the new engines of growth. Well, the future has arrived. UNCTAD´s World Investment Report 2011 observes that - for the first time ever - developing and transition economies absorbed more than half of global FDI inflows in 2010. As these countries increasingly integrate with the global economy, the work of strengthening their capacity to produce high-quality corporate reporting becomes ever more important.
Ladies and gentlemen,
During this session you will also hear two new country case studies on corporate governance disclosure, which are based on ISAR´s Guidance on Good Practices in Corporate Governance Disclosure. This ISAR guidance has become a useful tool for benchmarking international practices, sharing country experiences and promoting capacity building. I encourage all of you to consider working with us in the future to conduct further country case studies in your country.
Over the next three days there will be much discussion of the many elements of accounting infrastructure. One element is environmental accounting and reporting. Next year marks the 20th anniversary of the Earth Summit, first held in Rio de Janeiro in 1992. The United Nations is returning to Rio next year to convene a summit to galvanize global action on this critical issue. Even as world leaders prepare for the meeting in Rio, we already know that measurement and reporting is a critical step in the practical implementation of any outcome. Indeed this Group of Experts has been pioneering in its approach to issues of environmental accounting and reporting but more work remains to be done.
The subject of SME accounting will be addressed within your broader discussions of capacity building and the assessment tool. But I wanted to take this opportunity to highlight a new training programme on SME accounting that UNCTAD will launch later this year at one of our Empretec training centres in Peru. This programme emerges directly from the work of this group and your reporting guidance for Level 3 SMEs. Once again I would like to commend this group for its important work in this area. The deliberations by experts at these meetings and the building of consensus provide the basis for concrete training programmes that will help SMEs in developing countries. It is an outcome to be rightly proud of.
Ladies and gentlemen,
Let me end by saying that developing countries and countries with economies in transition will be in a better position to produce high quality corporate reports based on international reporting standards, codes and best practice, only when they have the necessary regulatory, institutional and technical capacity. The work that you undertake during this meeting is critically important to supporting these efforts. I wish you a productive session and look forward to the outcome of this year´s deliberations.