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Oct 06, 2011
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Cross-Industry Taskforce Calls on G-20 to Promote Economic Stability Through Regulatory Convergence
Final Report Issued by Private Sector Taskforce, Coordinated By the International Federation of Accountants, Also Warns of Regulatory Fragmentation
The International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 125 countries, has released the Private Sector Taskforce (PSTF) Report to G-20 Deputies. The PSTF report presents a set of recommendations on how to promote regulatory convergence from the perspective of a number of financial professions and industries.
The PSTF was established in May 2011 at the request of the Presidency of the G-20. The report provides the G-20 with an analysis of the development of financial policy and regulation, with the aim of facilitating economic stability in the world’s capital markets. The benefits of regulatory convergence are identified, as well as the inefficiencies and associated costs created by regulatory gaps. A range of possible scenarios and associated risks are thoroughly analyzed and explored, specific examples are given, and a set of recommendations are provided.
Coordinated by the International Federation of Accountants, the taskforce includes CFA Institute (CFA I); INSOL International; Institute of International Finance (IIF); International Accounting Standards Board (IASB); International Actuarial Association (IAA); International Corporate Governance Network (ICGN); International Insurance Society (IIS); and International Valuation Standards Council (IVSC).
“We have made great strides in regulatory convergence, but there is much more to be achieved. The Global Financial Crisis highlighted the importance of regulatory convergence—for example, the need for globally accepted high-quality standards across a number of areas, including financial reporting, auditing and auditor independence, as well as consistent implementation and enforcement—which are important for encouraging global economic stability,” said IFAC President Göran Tidström. “IFAC supports the G-20’s work to reform the international financial system and reduce informational uncertainty and risk, and thus avoid future financial crises. The PSTF report encourages the G-20 to maintain its current momentum towards international convergence, identifies existing gaps, and offers insightful recommendations. There will be no better time to progress these issues.”
The report stresses the necessity of open communication and transparent processes, as well as continued cooperation between national and regional regulators and professional and industry groups, in order to further develop global standards. It warns against the dangers of unilateral decision making, and advocates enhanced consultation and global cooperation on matters of regulatory reform, in order to avoid regulatory fragmentation.
“Enhanced coordination and consultation with all stakeholders is imperative,” said IFAC Chief Executive Officer Ian Ball. “Unilateral policy reform initiatives make it more difficult to achieve convergence—on the contrary, they constitute regulatory fragmentation. The PSTF report represents a collaborative effort by a diverse group of professions and industry bodies; we hope jurisdictions worldwide can likewise come together to support the cause of economic stability.”
The PTSF report with the full recommendations is posted on the IFAC website.
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
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