Are global accounting standards achievable?

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05 Feb 2009

In an article published in the 3 February 2009 edition of La Tribune (the French business daily), Nicolas Veron questions whether there is an appetite around the world for global solutions to the current global economic crisis, or whether regional or national responses are more likely to work.

Mr Veron, a research fellow at European 'think tank' Breugel, argues that global solidarity on economic issues is probably out of reach. Instead, the goal should be more modest – to maintain an open economy in which all players have a chance to succeed. Mr Veron suggests that 'fair global competition entails in the short term a curb on domestic preference policies.... It also rests on harmonised international rules in key areas of regulation.' Click to download the article, titled Global Crisis: Global Solutions? (PDF 45k), which we have posted with the kind permission of the author. An excerpt:

The crisis has also put international accounting standards, known as IFRS, in the dock. The IASB, which sets them, was slow off the mark and then overly cowed by political pressure. The prospects for IFRS adoption in the US seem distant once again.

Besides, common standards only serve a purpose if their implementation on the ground is consistent, which is currently far from being the case.

Finally, trust crucially rests on credible supervision of the clutch of global private intermediaries whose role is paramount for the whole system. For these, self-regulation is no longer enough to foster confidence.

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