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

ACCA calls on G20 to drive reform of the global financial agenda

ACCA calls on G20 to drive reform of the global financial agenda

G20 meeting in Toronto provides incentives and opportunities to build a sustainable economy, says global accounting body

As the Group of Twenty nations (G20) prepares to meet in Toronto next month, ACCA (the Association of Chartered Certified Accountants) has put forward its key recommendations for global policy-makers.

On 26-27 June 2010, around 1500 delegates, including heads of state, will convene to discuss the global financial crisis and assess what progress has been made on the road to recovery. In a new paper in line with the theme of the summit, Recovery and new beginnings, ACCA calls on world leaders to deliver on promises made at previous summits, and go further in their efforts towards financial sector reform, robust accounting standards, and strong, sustainable growth.

"A repetition of a catastrophe on this scale is something neither governments, nor the public, nor the global business community could countenance", says Head of ACCA Pakistan, Arif Masud Mirza. "We feel the crisis has provided both an incentive and an opportunity for the wholesale financial reform which will lead to a sustainable global economy."

While ACCA commends the pledges made by the G20 to date, the Recovery and new beginnings identifies several areas in which further action is needed. In particular:

* The G20 should turn its stated commitment to integrity in financial institutions into reality, by encouraging moves to instil ethical business codes and better risk management functions in the financial and corporate sectors
* The G20 must broach the question of 'too big to fail' financial institutions, and consider as a serious option the separation of retail and investment banking
* The G20 should now take concrete steps towards the implementation of IFRS (International Financial Reporting Standards), and ensure accounting standards are free from undue political influence
* Sustainability and tackling climate change should be embedded in the G20's agenda, and ingrained in business practice through the use of a global carbon reporting standard

ACCA also raises questions about the structure of the forum itself: "It is unclear how the interests of smaller economies are represented at the table," says Arif Mirza. "So while the G20 may be more inclusive than the G8, some introspection is needed to make sure it is truly representative, and avoid accusations that it is an exclusive club."

Though the G20 has existed since the financial crisis in Asia in 1999, it is only over these past two years that it has really cemented as an entity, and only at the summit in Pittsburgh last September that it was designated the premier forum for international economic cooperation. Clearly, there remains much still to do. But, concludes Arif Mirza: "Given the leadership it has shown this far, ACCA is calling for the G20 to be made a permanent fixture with a secretariat established, so its remit extends beyond the short-term, and beyond economic issues, to a broader global governance role."