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By Joseph Bryson
Joseph Bryson is Director, Quality & Development, at IFAC, where he oversees the Member Compliance Program’s development and implementation, the member admissions process, and professional accountancy organization capacity building, guidance, and support for prospective and existing member organizations. Mr. Bryson began his career with IFAC in 2008 as the Latin America and the Caribbean regions portfolio manager for the Member Compliance Program and was previously employed in Deloitte Argentina.
The global surge in nationalism and the alarming trend toward ongoing regulatory fragmentation threatens to drive up costs to international businesses, decrease global financial transparency, exacerbate risks in the financial system, and impede economic growth. Further, the International Federation of Accountants and the Business and Industry Advisory Committee to the OECD recently estimated that regulatory fragmentation costs financial institutions alone more than $780 billion annually.
Despite a challenging global environment, the accountancy profession has for decades recognized the importance of consistent and strong international reporting standards. By ensuring business information is reliable worldwide, the accountancy profession builds the trust that provides investors the confidence to invest, ensures stability in multinational markets, improves the flow of information, and connects countries and people across borders.
The adoption of consistent standards also provides tangible improvements to the way businesses, governments, and economies understand and assess their finances. Applying a common language to financial reporting allows these groups to fully participate in the global economic system and gain access to the free flow of capital, enabling wider economic growth.
As the global organization for the accountancy profession, IFAC supports the development, adoption, and—most critically—implementation of international standards that serve the public interest. To measure the progress of the adoption of international standards, IFAC released the first-of-its-kind International Standards: 2017 Global Status Report, which demonstrated that the accountancy profession has largely stayed independent of trends toward fragmentation and has continued to converge—developing and implementing effective, clear, global standards that facilitate growth and international transparency.
With no legal standing, international standard setters must work to persuade national jurisdictions around the world to adopt one consistent set of standards. National and regional accountancy organizations, therefore, have for the last few decades leveraged technical credibility to build relationships with governments, regulators, and stakeholders, representing the profession to encourage adoption of international standards.
The study of 104 IFAC member organizations in 80 jurisdictions found that rates of adoption of international standards are strong, with some key highlights:
Current adoption rates show clear signs of success and indicate a commitment to a transparent global market on behalf of both professional accountancy organizations and many stakeholders, including governments and regulators. The report also indicates that the global economic system would benefit from more collaboration on the part of these groups.
Many organizations report that legislative delays, lack of buy-in and collaboration among regulators and stakeholders, and lack of resources were limiting their ability to adopt standards.
Governments can help to build a strong economy and strengthen their position for global trade by prioritizing adoption of international standards, passing laws to support these standards, and funding further development of the accountancy profession in their countries. Despite protectionist trends, international approaches to these issues, such as taxation, where 73 percent of people in G-20 countries think it’s important for governments to cooperate to build an international system, maintain popular support.
As the accountancy profession continues to persuade national jurisdictions around the world to adopt consistent standards, IFAC is continuing to analyze implementation of accountancy standards, providing much needed resources and information to help encourage adoption of international standards; identify areas for continued promotion of standards; and build capacity in the accountancy profession to ensure implementation is sustained.
In this way, the profession—partnering with the business community, governments, and influencers—can build a global economy that is transparent, consistent, and efficient for all.
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