UK FSA chairman calls for global accounting standards

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21 May 2003

In the 2003 Monetary Authority of Singapore Annual Lecture (PDF 33k), Sir Howard Davies, chairman of the UK Financial Services Authority (FSA), identified a comprehensive set of international accounting standards, enforced through high quality independent audits, as the number one item on his agenda for change to strengthen the international financial structure: Accounting standards are the foundation stone of the financial system, and of financial regulation. Without accounting numbers in which investors can have confidence, regulation cannot hope to be effective.

And those accounts must be audited objectively and independently.

Since the reformation of the International Accounting Standards Board three years ago a determined effort has been under way, led by Paul Volcker and David Tweedie, to complete the standard set and secure broad agreement to their acceptance around the world. They are now close to success, but there are some difficult obstacles still to be overcome, notably the question of the treatment of financial instruments (IAS 39). I very much hope an acceptable solution can soon be found. It would be a great pity if this opportunity were missed, and without satisfactory accounting for financial instruments IASs are unlikely to be accepted in the US.

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