FIAR Continues Regulators’ Dialogue

State Board Report

October 2009

NASBA Chair David A. Costello called on the approximately 100 attendees at the second Forum for International Accounting Regulators to approach regulation in a positive manner: “Regulation should be positive; after all, it is done to protect the public interest. Regulation is now global as meltdowns affect everyone. So regulation must be global too. We want to continue the dialog we started last year: How can we reinforce the positive response to the public?”

President Obama is moving forward with financial reforms, Cynthia A. Fornelli, executive director of the Center for Audit Quality, told FIAR. The administration hopes to have created a financial consumer protection agency by the end of September, with a final measure presented to the House by the end of the year, as well as progressing toward a “single set of high quality independent accounting standards” by the end of the year. Ms. Fornelli said the SEC may not decide on its roadmap to IFRS adoption until 2011, and she believes the lack of a date certain for the adoption of IFRS discourages constituents from beginning work on transition to those standards. If the US does not have a date certain, then Japan has indicated they will not set one out either. Other countries are beginning to feel they need to reconsider IFRS as well, although, she observed, “It is hard to find anyone who does not accept the theory of a single set of standards.”

The United States is the largest services trading country in the world, Christine Bliss, of the US Trade Representative’s office told the meeting. She is one of the USTR’s lead negotiators with regard to financial services, and she commented, “People see off?shoring as a one?way street, but it is not true – particularly in the services sector. The flow of trade is on the rise.” The United States currently has 11 free trade agreements with three others waiting for enactment. As mobility rises, there is a greater demand for common standards, Ms. Bliss asserted; however, she added that trade agreements do not address standards. The GATS (the General Agreement on Trade in Services under the World Trade Organization) calls for transparency and objectivity. GATS commitments are a way of ensuring what is being negotiated in a mutual recognition agreement will actually be of use, but those commitments will not apply until the WTO completes its “Doha round” of negotiations.