State Board Report

August 2009

The International Federation of Accountants’ “G20 Accountancy Summit,” held July 23?24 in London, resulted in a call for the G20 nations to adopt and implement common global standards in accounting and auditing and for auditor independence. Nearly 40 accountancy institutions and organizational partners from 17 of the G20 countries attended the Summit which developed recommendations for the next meeting of the G20 nations, to take place September24?25, 2009. NASBA President David A. Costello addressed the IFAC Summit, stressing the need for independent standard setting, as well as consistent oversight of practicing professionals.

“NASBA supports the grand ideal of global accounting and auditing standards developed by highly qualified representatives of subscribing governments. These standard setters and any standard setting body to which they’re attached must be truly independent. This independence would include consideration of funding sources, professional ties, organizational structure and, certainly, membership composition,” President Costello told the Summit.

His words were echoed in the resulting letter to the G20 Secretariat, which states: “The G20 should ensure that the funding of the IASB meets criteria of adequacy, stability and independence.”

President Costello also underscored the need for “an international ethics code comprised of standards and guidelines to which professionals are held accountable.” He ascribed the prevailing crisis of trust in the financial markets “much more to ethics failures” than to failures in meeting technical standards. The IFAC Summit’s recommendations to the G20 nations fell under eight broad statements:

1? The G20 should encourage all governments to adopt and implement common global standards not only for accounting, but also for auditing and for auditor independence.

2? The G20 should take further steps to ensure that the IASB can function independently without inappropriate political interference.

3? The G20 should support the adoption and implementation of International Public Sector Accounting Standards in all nations.

4? The G20 should call for measures to enhance corporate governance in their respective countries and the global marketplace.

5? The G20 should explicitly address the needs and realities of small and mediumsized enterprises in the formulation and implementation of policies and reforms.

6? The G20 should commit to the long?term strengthening of the accountancy profession in developing and emerging countries.

7? The G20 should facilitate a debate with prudential regulators [statutory auditors] and a broad group of users of financial statements to consider the implications for financial reporting of making adjustments to standards to meet the needs of prudential [federal government] monitoring and supervision.

8? The G20 should support the development of new tools and metrics to achieve global sustainability.

The recommendations appear to be in line with the recommendation made in the Obama Administration’s June White Paper: “We recommend that the accounting standard setters make substantial progress by the end of 2009 toward development of a single set of high quality global accounting standards.”

President Costello reported that he was assisted at the London meeting by Linda Biek, NASBA Director of Governmental, International and Professional Relationships, in explaining to the IFAC member bodies that the State Boards of Accountancy collectively oversee the largest group of licensed accounting professionals in the world, over 600,000, and that these Boards are legislatively mandated to protect the public interest. He told the Summit: “In order to make the best decisions, NASBA and State Boards must be included in the various processes that are part of standard setting. Failure to do so reveals a flaw in the system that may lead to delayed implementation – or no implementation.” He underscored that standard setting must include the “critical elements of total transparency and vetting to all affected parties.”

IFAC should take a look at what is being achieved with mutual recognition agreements (MRA), President Costello advised. He said NASBA was looking forward to having IFAC work to encourage more MRAs to raise the level of accounting and auditing practice around the world.

“Regulators, professional organizations and standard setting bodies must work together to ensure that the interest of the public is at the forefront of all decisions,” President Costello stated at the Summit.

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