In an agreement reached Friday to make dozens of changes to the regulation of financial markets, systems and institutions, the leaders of the G-20 called on “international accounting bodies to redouble their efforts to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process, and complete their convergence project by June 2011.”
This most recent statement by the G-20 leaders follows previous statements calling for a single set of global accounting standards and other accounting changes at summits held in Washington last November and in London in April.
In November 2008 the SEC, under then-Chairman Christopher Cox, published a proposed road map for the adoption of International Financial Reporting Standards (IFRS) in the United States starting with the largest companies’ reports for fiscal years beginning on or after Dec. 15, 2014, provided certain milestones (including—but not limited to—improvements in accounting standards), had been met by 2011.
On Sept. 18 SEC Chairman Mary Schapiro revisited the IFRS issue when she commented publicly, “I expect we will speak a little later this fall about what our expectations are with respect to IFRS,” according to Dow Jones News Wires. She also said “it would be ideal if we can have a single set of high-quality accounting standards that worked globally.”
Friday, the G-20 leaders also called on the International Accounting Standards Board (IASB) to “further enhance the involvement of various stakeholders.” Although the G-20 provided no specifics on how the IASB should enhance stakeholder involvement, the IASB’s parent organization, the IASC Foundation, is currently reviewing proposed changes to its constitution that include expanding the IASB’s liaison with other organizations such as regulatory agencies and other stakeholders. The IASC Foundation plans to finish its constitution review in 2010.
In contrast to the more familiar G-8, the G-20 is a relatively new organization whose prominence has grown rapidly since the Bush administration invited the G-20 leaders to Washington to deal with the financial crisis last November. Prior to the Washington summit, the G-20 was an organization not of national leaders, but of the finance ministers and central bank governors of 19 of the world’s most significant industrial and emerging economies, and the European Union. The G-20 had no official powers or permanent staff, and its decisions depended on the follow-through of its members within the limitations of their authority in their respective jurisdictions.
At the Pittsburgh summit, the leaders of the G-20 nations, hosted by President Barack Obama, appeared to open a new chapter to the organization’s role in world affairs with their agreement to designate the G-20 as the premier forum for their international economic cooperation. “We have asked our representatives to report back at the next meeting with recommendations on how to maximize the effectiveness of our cooperation,” said the leaders in a statement.
The next G-20 Summit will be held in Canada in June 2010, and in Korea in November 2010. The leaders stated that they expect to meet annually thereafter, and will meet in France in 2011.
—Matthew G. Lamoreaux is a JofA senior editor. His e-mail address is email@example.com.