G20's four pillars for agenda reform built on uneven foundations, says ACCA

G20's four pillars for agenda reform built on uneven foundations, says ACCA

The global body for accountants, ACCA (the Association for Chartered
Certified Accountants) has responded to last week's G20 meeting by
saying that its "pillars for agenda reform" are built on shaky ground.

The G20's first pillar - a strong regulatory framework, and the third
pillar - resolving issues to do with financial institutions in crisis
- are particularly unsteady and lack real global co-ordination, says
ACCA, highlighting the fact that no decision was agreed on a global
bank tax.

The second pillar - effective supervision with stronger rules, more
effective oversight and supervision - also fell short, and ACCA is
disappointed at the lack of any reference to the previous pledge for a
2011 deadline for international agreement on accounting standards.
This risks losing high-level impetus on this crucial area of action to
facilitate international business.

The final pillar - transparent international assessment and peer
review, strengthening their commitment to the IMF/World Bank Financial
Sector Assessment Program (FSAP) and supporting robust and transparent
peer review through the Financial Stability Board - means that the G20
is looking to review issues, discuss them and be vigilant. ACCA says
that consultation is vital in the coming months.

Despite the shaky foundations, ACCA is particularly pleased that the
G20 examined sustainable public finances, emphasising the need for
countries to put in place credible, properly phased and
growth-friendly plans for fiscal sustainability.

Mr Arif Masud Mirza ,Head of ACCA Pakistan , says: "Real co-ordinated
action was missing from the Toronto meeting; the International
Monetary Fund (IMF) has warned that an unintended consequence of this
lack of real co-ordination could mean the loss of millions of jobs and
$2.25trillion in global output being at risk."

Mr Mirza adds: "Stability is crucial ahead of the next meeting in
Seoul later in the year and there is a real risk that complacency
could plunge the global economy back into danger. ACCA recommends that
while recent indications of economic expansion give cause for cautious
optimism, it is too soon to abandon stimulus programmes. Before any
withdrawal of stimulus, there must be a complete exit strategy in
place."

ACCA also notes that current demand in many major economies is
sustained by exceptional policy measures. While this unprecedented
intervention averted a much worse crisis, governments must now devise
credible, medium-term plans to address the shortfalls in public
finances arising from reduced tax yields and their necessary erstwhile
support.

Mr Mirza concludes: "ACCA believes G20 leaders must make best use of
the information available to them to assess the current economic
conditions and carefully consider the need for further global fiscal
stimulus."

The next summit is in Seoul, Korea, on November 11-12, 2010.

Husnain Rasheed