OECD corporate governance standards address accounting

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07 May 2004

The governments of the 30 OECD countries have approved a revised version of the OECD's Principles of Corporate Governance, adding new recommendations that respond to issues that have undermined the confidence of investors in company management in recent years.

They call on governments to ensure genuinely effective regulatory frameworks and on companies themselves to be truly accountable. Those principles support the adoption of either internationally recognised accounting standards or domestic accounting standards that are consistent with international standards. Click to Download the OECD Principles (PDF 559k) or Press Release (PDF 31k). IFAC has issued a Press Release (PDF 70k) supporting the OECD principles. Here is an excerpt relating to financial reporting:

Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure.

The application of high quality standards is expected to significantly improve the ability of investors to monitor the company by providing increased reliability and comparability of reporting, and improved insight into company performance. The quality of information substantially depends on the standards under which it is compiled and disclosed. The Principles support the development of high quality internationally recognised standards, which can serve to improve transparency and the comparability of financial statements and other financial reporting between countries. Such standards should be developed through open, independent, and public processes involving the private sector and other interested parties such as professional associations and independent experts. High quality domestic standards can be achieved by making them consistent with one of the internationally recognised accounting standards. In many countries, listed companies are required to use these standards.

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