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G20 continues calls for convergence

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09 Sep 2013

The Group of 20 (G20) has released its G20 Leaders' Declaration and accompanying documents from the G20 Leaders' summit held in St. Petersburg on 5-6 September 2013. Focused on the theme of "cooperation, coordination and confidence", which aims for a stronger and sustainable growth to end the global financial crisis, the Declaration also discusses again the need for convergence of accounting standards.

In the lead up to the summit, the Financial Stability Board (FSB) had published a report which summarises the outcomes over the past five years of the fundamental reforms of the global financial system, which were launched by the G20 in 2008 in response to the global financial crisis.

The outcomes noted in the report are included in the preamble to the Declaration:

In the five years since we first met, coordinated action by the G20 has been critical to tackling the financial crisis and putting the world economy on a path to recovery. But our work is not yet complete and we agreed that it remains critical for G20 countries to focus all our joint efforts on engineering a durable exit from the longest and most protracted crisis in modern history.

In terms of accounting standards, the Declaration repeats the call for convergence in much the same terms as previously, but includes an explicit call for the convergence projects to be completed by the end of 2013.  Also included for the first time is specific reference to the need to improve risk disclosures by banks as recommended by the Enhanced Disclosure Task Force (EDTF) in October 2012, which were subject to a progress report from the task force in August 2013:

We underline the importance of continuing work on accounting standards convergence in order to enhance resilience of financial system. We urge the International Accounting Standards Board and the US Financial Accounting Standards Board to complete by the end of 2013 their work on key outstanding projects for achieving a single set of high-quality accounting standards. We encourage further efforts by the public and private sector to enhance financial institutions’ disclosures of the risks they face, including the ongoing work of the Enhanced Disclosure Task Force.

The Declaration touches on other important themes, such as:

  • the high level of public debt and its sustainability in some countries, echoing earlier statements by the G20 Finance Ministers and Central Bank Governors which included discussion of the need for reform of public sector reporting, consistent with the broader G20 vision of open and transparent governments
  • the focus of 'development for all', which links to the post-2015 development goals of the United Nations, the Rio+20 'The Future We Want' outcome document and other global initiatives around economic, social and environmental goals, which includes increasing moves towards greater sustainability reporting
  • support for initiatives aimed at increasing extractive transparency, including voluntary participation in the Extractive Industries Transparency Initiative (EITI)
  • approval of the OECD/G20 Action Plan on Base Erosion and Profit Shifting which seeks to improve the fairness and integrity of global tax systems, including the introduction of new transfer pricing documentation which would require entities to disclose income, economic activity and taxes paid using a common template.

The final Leaders Declaration is is available on the G20 website. In addition, there are various annexures available, such as the EDTF report and and the G20/OECD high-level principles of long-term investment financing by institutional investors.

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