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Association of Certified Accountants’

Global accounting standards increase in popularity

Thu, 19 Jan 2012 10:53

The Association of Certified Accountants’ (ACCA) international survey: “Towards greater convergence,” indicates that support for global standards amongst CFOs and investors, across the US, Europe, Asia and the Middle East has increased since the start of the global economic crisis.

These findings are based on surveying 163 Chief Financial Officers and investors across the US, Europe, Asia and the Middle East in August 2011, to obtain a better understanding of their perspectives on global reporting standards.

The report was launched at the 28th session of UNCTAD’s Integrated Working Group on International Standards for Accounting Reporting (ISAR), in October 2011. “The global economic crisis has confirmed just how intertwined, interdependent,and exposed economies are in terms of global business, financial markets and capital markets. Investors and regulators worldwide are now increasingly recognising the value of International Financial Reporting (IFRs) standards, and the role that these could potentially play in restoring investor confidence,”says Head of ACCA South Africa, Nadine Kater.

Although CFOs and investors in South Africa were not included in ACCA’s sample, Kater says “it is highly unlikely that the opinions of South African-based CFOs and investors would be out of synch with their global counterparts”.

Proposed in the 1960s, international accounting standards were first issued in 1973 by the International Accounting Standards Committee. Around 120 countries worldwide have embraced IFRs. “Global accounting standards have been adopted amongst others, by the UK, the European Union, Hong Kong, Australia, Pakistan, Russia, Turkey, Australia, New Zealand and South Africa. South Africa was an early adopter. South Africancompanies listed on the Johannesburg Stock Exchange, have been required to embrace IFRS since 1 January 2005. Some may be surprised to learn that IFRS have not been adopted by the US or China,” Kater explains.

She concedes that the idea of implementing global accounting standards has always been somewhat contentious. “ACCA has always favoured the implementation of global accounting standards. We believe these deliver comparability and transparency. The latter, is particularly important in the wake of the global meltdown in financial markets.

Those opposed to IFRS are generally opposed to the concept of fair value accounting practices and even cite this as a contributing factor to the credit crisis. This is not a view, which ACCA supports. ACCA is delighted that the research confirms that growing familiarity with global standards in financial reporting is reducing resistance to the implementationof IFRS. This augurs well for the future,” Kater observes.

Key research findings include the fact that more than 40% of the CFOs and investors surveyed believe IFRS has improved access to capital; 25% believe its adoption has lowered capital costs; 60% see international standards as facilitators of more consistent regulation.

Rising demand from investors and customers for greater disclosure is fuelling an appetite for global standards in non-financial reporting. Some 37% of CFOs believe standards will improve non-financial reports such as those on corporate responsibility and environmental risk.More than two thirds of respondents concur that benefits from integrated reporting include better decision-making and a more accurate picture of overall performance.

“These are very positive results. ACCA has always championed Sustainability reporting. We inaugurated our annual Sustainability Reporting Awards more than twenty years ago. These Awards are particularly well-supported in South Africa. We arealso delighted to learn that CFOs are able to see the benefits of integrated reporting. This is a very important development in corporate reporting post the global financial crisis, and it is something, which ACCA is supporting, globally.

The fact that our CEO, Helen Brand, is a member of the strategic steering committee of the International Integrated Reporting Committee, attests to our conviction that integrated reporting is indeed the way forward, for the accounting profession,” Kater notes.

The full-report can be downloaded from ACCA’s website

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