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IFAC study on rebuilding confidence in financial reporting

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

11 Aug 2003

A task force commissioned by the International Federation of Accountants to address, from an international perspective, the loss of credibility in financial reporting and to suggest approaches to resolving the problem has issued its report.

The report makes a number of comments with respect to accounting standards, including these:

  • "It is inevitable when standards are established at the national level, even where those standards are purporting to implement an international standard, that differences will arise among countries. These issues would be of less consequence if countries adopted international standards, rather than adapted their standards to comply with them. With the exception of the E.U., this does not appear to be the approach being adopted by most of the developed countries."
  • "We support IFRSs becoming the worldwide standards for accounting. We believe that, as soon as possible, international standards should replace national standards."
  • "We support the general approach of IASB in setting principles-based standards, rather than establishing lengthy lists of detailed rules. A rules-based approach encourages a legalistic approach and the finding of loopholes, rather than attention being given to the objectives and principles of the standard. The principles-based approach requires the use of more judgment by management and by the auditor."
  • "We recommend that the convergence process for international accounting standards be given a greater sense of urgency; this will require extensive cooperation between IASB and national standard setters."
You can download the report from IFAC's Website (PDF 231k).

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