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IFAC calls for G20 to adopt global standards and support integrated reporting

  • IFAC (International Federation of Accountants) (lt gray) Image

Jun 14, 2012

The IFAC has written to the G20 nations outlining its recommendations for consideration at the G-20 Leaders’ Summit on June 18–19, 2012, in Los Cabos, Mexico. The recommendations include global adoption of IFRSs and International Standards on Auditing (ISAs), increased resources for regulators and standard setters, and support for the International Integrated Reporting Council's proposed integrated reporting framework.

In relation to the global adoption and enforcement of accounting and auditing standards, IFAC supports the adoption of the auditor independence requirements set out in the Code of Ethics for Professional Accountants issued by IESBA.

The letter goes on to note:

IFAC considers it critical that the G-20 continue its momentum and ambition for regulatory reform and convergence that has been developed over the last few years. . . . IFAC recognizes that there are some areas where global standards may need further development and enhancement. However, the way forward is to encourage and resource improvements in those global standards, rather than have individual jurisdictions make country-specific revisions and amendments. Additionally, it is important that G-20 nations are discouraged from implementing national regulatory reforms, which involve legislative changes that have extraterritorial impacts.

In relation to the recommendation the G20 support of the IIRC's integrated reporting framework, the letter notes:

A common criticism of current financial reporting regimes is that they often fail to appropriately recognize the social, environmental, and long-term economic context within which businesses — whether they are in the public sector or private sector, or whether they are large and complex or small — operate. A thorough understanding of this context is imperative if the objectives of global sustainability and growth are to be achieved. As evidenced in the global financial crisis, a focus on short-term risks and rewards can encourage behaviors that lead to inappropriate and disastrous outcomes.

The letter covers a number of other recommendations, including the development of sustainable organizations, strengthening the accountancy profession in developing and emerging economies, and greater accountability and transparency in the management of public resources.

Click for access to the full letter (link to the IFAC Web site).

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