“Leaders need to choose between two separate paths. In one direction lies renewed vigor for working together tackling growing challenges and embracing the opportunities of a digitalized, globalized 21st century. In the other lies a return to nationalism and protectionist policies that threaten to derail progress made over decades.” — Forward, Rachel Grimes, IFAC President and Fayezul Choudhury, International Federation of Accountants (IFAC) CEO
Ahead of their 12th annual G20 Summit on July 7th, in Hamburg, Germany, and in perhaps a rebuke to the nationalistic, populist movement that saw the rise of Brexit and the election of American President Donald Trump, IFAC leaders issued a call to action titled Build Trust. Inspire Confidence. The call to action, which highlights the 2017 priorities of G20 countries to build resilience, improve sustainability, and assume responsibility, provides ten “specific, actionable recommendations,” that require collaboration and cooperation to seize the opportunities of a globalized planet in the 21st century.
Many of these recommendations have already seen periodic implementation efforts:
The United States legislative branch has issued numerous tax reform proposals aimed at leveling the playing field for small businesses by lowering the tax rate for “pass-through” entities.
The Organization for Economic Co-Operation and Development (OECD), initiated by the G20, headed a project commencing in 2012 that aimed at reducing base erosion and profit sharing (BEPS) by multinational corporations.
India, in November of 2012, saw the Aam Aadmi Party (AAP) emerge out of the country’s strong anti-corruption movement.
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have been working on a converged, integrated accounting standards framework since 2002 (though the plausibility of such a project remains in question).
All of these developments are reflective of the “actionable recommendations” proposed by the IFAC, but there remains a vast weakness in the global economic chain. It is a weakness created by the variability in international governance, currency, information technology, and global tax structures.
IFAC’s CEO, Fayez Choudhury, in connection with the call of action release, said that “rebuilding trust in the global economy and financial systems is critical to inspiring the confidence the world needs for sustained economic growth. Especially in these uncertain times, stakeholders with a passion for transparent, accountable governance must work together.” To this end, the IFAC is calling on the G20 to raise governance standards, and foster transparency and regulatory consistency.
Key takeaways from the report include:
Strong governance remains the key to satisfying G20 priorities: building resilience, improving sustainability, and assuming responsibility.
Regaining public trust and inspiring confidence requires a regulatory approach that fulfills promises, and provides a sound footing for economic growth and opportunity.
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