Accounting - A Priority for G20 Summit Agenda

G20 Leaders’ Summit in Washington must consider the accounting issues emanating from the global financial crisis as a priority, Australia’s Joint Accounting Bodies said.

 

In a letter to Australian Prime Minister Kevin Rudd, the Joint Accounting Bodies (CPA Australia, the Institute of Chartered Accountants in Australia and the National Institute of Accountants) cite fair value accounting, the distinction between financial and prudential reporting and the independence of the international accounting standard setting process as critical topics for the summit to address.

 

CPA Australia Chief Executive Officer (CEO) Geoff Rankin said the benefits of fair value accounting had to be highlighted in light of questions around its usefulness in the current climate.

 

“We strongly believe that fair valuing derivatives and some financial assets is the most effective method to reflect the economic reality,” he said.

 

“While fair value can be difficult to determine in current market conditions, the transparency and comparability it brings are undisputed.

 

“To revert to historical value, as some have advocated, would inhibit capital providers’ capacity to make informed investment decisions and it is on such decisions that the efficiency of the capital markets rely.”

 

H.N