07 July 09 - Single set of high-quality financial reporting standards needed to restore investors´ confidence
Participants in the conference on the financial crisis and its implications for the international financial reporting architecture and financial stability hosted by UNCTAD underscored the critical importance of a single set of high-quality financial reporting standards for restoring investors' confidence and fostering financial stability around the world.
In his opening remarks, the Deputy Secretary-General of UNCTAD Petko Draganov said that, "given the scale and pervasiveness of the crisis, it has become abundantly clear that no single country or region can successfully counter the downturn on its own. A durable solution can be found only through the collective efforts of all countries." The Deputy Secretary-General further noted that "there is a pressing need for cooperation and collaboration on a global level. International standards need to be strengthened and implemented consistently around the world."
In his keynote address, Mr. René Ricol, Credit Mediator for French Businesses and former President of the International Federation of Accountants, noted that in the aftermath of the financial crisis, corporate accounting and reporting issues were being discussed at the highest levels, including the Group of 20 (G-20), the Group of Eight (G-8) and by heads of government and states and ministers at other fora. He underscored that these developments should be reason for serious concern for accounting standard setters and the accounting profession in general. Mr. Ricol also highlighted that although financial reporting standards have became the subject of extensive debate, the financial crisis was not caused by accounting standards.
From left: Nelson Carvalho, Chairman of the twenty-fifth session of ISAR; Petko Draganov, Deputy Secretary-General of UNCTAD; and René Ricol, Credit Mediator for French Businesses and former President of the International Federation of Accountants (IFAC) - at the opening of the conference.
Two panels discussed the implications of the financial crisis for financial reporting from various perspectives. In considering the interaction between general purpose financial reporting and prudential regulation, some experts took the view that there was no strong justification for differences between the financial statements prepared for investors and those prepared for regulators.
Following a presentation on actions the International Accounting Standards Board (IASB) has been undertaking in response to the financial crisis, participants expressed concern that due process - including broad consultation - could be compromised in the IASB efforts to respond to the financial crisis in an expedited manner.
The discussion of the role of credit rating agencies and the credit rating process prompted a series of questions from participants. Some of the questions related to the regulation of credit rating agencies and standardization and the consistency of ratings by different agencies. There was a broad understanding of the need to enhance the regulation of rating agencies and improve the rating process.
The conference was organized as a follow-up to the twenty-fifth session of the UNCTAD Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR), which was held in Geneva in November 2008. ISAR was established as a standing working group of experts in 1982. Since 2005, ISAR has been deliberating on the challenges arising from the practical implementation of International Financial Reporting Standards (IFRS).