State Board Report

October 2009

Representatives from Bermuda, Canada, China, Denmark, Mexico, New Zealand, the Philippines, Poland, the United Kingdom and the State Boards of Accountancy were told by Fermin del Valle, former International Federation of Accountants chair, that they need to consider convergence of standards as adoption, not accommodation, of international standards. Addressing the second Forum of International Accountancy Regulators, held in San Francisco, September 10‐11, 200,7, he told the conference: “We have to come to grips with public regulation: The public expects an independent view. It is independent regulation on a global basis – that’s what we are talking about today.”

The attitude taken by the United States to the adoption of high quality international financial standards will be the key to convergence around the world, Mr. del Valle explained. He called on the Financial Accounting Standards Board to stop issuing their own standards, and to instead focus on becoming an active participant in the international standard setting process. “Many of the national standard setters have accepted this, including Japan, and they are looking to the U.S. to take a similar position,” he said. He warned that the period for adoption of international standards cannot be indefinite, as more countries will believe they can also set standards. He added, “European standards could also sound the death of global standards.”

The converging of auditing standards is just as important as converging accounting standards, Mr. del Valle stated. He believes the Public Company Accounting Oversight Board’s work would be strengthened if they worked with international standards.

Knowledge and innovation will continue to be the key drivers of accounting standards, and regulation is key to ensuring those standards are followed, he explained. However, Mr. del Valle cautioned: “Regulators must make sure not to be a barrier to innovation or knowledge generation.”

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