An international group of professional accountancy organizations is calling for a global debate on reducing complexity in financial reporting.
The Global Accounting Alliance (GAA), a group that includes the AICPA and nine non-U.S. accountancy bodies, published a report that outlines a need for international discussion of financial reporting complexity and accelerating the move toward principles-based financial reporting standards. The group wants to spark a conversation on questions such as how company boards can be encouraged to focus on communication rather than simply compliance when issuing financial statements and whether regulators should be urged to accept a reasonable degree of variation in accounting treatments.
The GAA plans to host round-table events on the issues in the United States and other countries. The AICPA will help organize such a round table this spring in New York, said Dan Noll, director, accounting standards, for the AICPA and a member of the GAA team that worked on the project.
The GAA report draws on interviews conducted in early to mid-2008 with financial regulators from the U.K., Canada, Australia, China, the United States of America, South Africa, France, the European Commission and international regulators, among others. Representatives of major accounting and auditing practices were also interviewed.
“It is clear from our research that a body of principles based international standards is viewed around the world as the best basis on which to report the economic substance of financial transactions, and that further steps are needed to ensure that principles are embraced more fully,” Kevin Dancey, GAA chairman and CEO of the Canadian Institute of Chartered Accountants, said in a press release. “This could include a professional judgment framework that is accepted by regulators and others around the world. It is also clear that there is a strong interest in turning back the tide of growing complexity in financial reporting. But there are major legal, cultural and regulatory challenges that will need to be tackled if we are to achieve these objectives.”