The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Is the Upcoming G20 Meeting the Only Hope for Convergence of Global Accounting Standards?

Share article

Government officials at the April G20 summit agreed that some degree of harmonisation is needed in order to achieve a globally accepted set of accounting standards. However, this year has instead witnessed further divergence on these standards, as the each jurisdiction has sought to tackle the fallout from the downturn in the markets. The US in particular is pursuing a different track than the other 100 countries using International Financial Reporting Standards (IFRS). Many are therefore pinning their hopes on next month’s G20 meeting in Pittsburgh as a forum for getting convergence back on track.

Regulators and governments have called for increased transparency and greater consistency of global accounting standards in order to level the playing field for firms and investors alike. This has proved easier said than done, however, and the US in particular is aggressively pushing for more forward looking provisioning in accounts to reflect future risks to balance sheets, rather than limiting this to regulatory purposes like Europe.

The mark to market furore is a prime example of how the US has gone a different direction from the rest of the world, as the Financial Accounting Standards Board (FASB) was forced into revising these rules due to lobbying and political pressure. It therefore seems the US’s overhaul of financial regulation has derailed its plans to converge with the standards of other countries.

The US has also thus far failed to give a firm date as to when it will be adopting IFRS in the future. Other jurisdictions are soon to come on board, however, including Japan, Korea, India and Canada, who have all committed to using the standards by 2011.

Although switching to IFRS will pose many technical challenges and prove costly for the market, convergence is necessary, according to the logic of the global regulatory community. Last week, Helen Brand, chief executive of the Association of Chartered Certified Accountants in London, commented: “G20 leadership is essential for maintaining commitment to a global solution, and in seeking to avoid national or regional versions of IASB-issued IFRS.”

It will therefore lie in the hands of the attendees at the Pittsburgh summit to thrash out the solution…

Related content

WEBINAR

Recorded Webinar: Best Practices for Integrated Regulatory Reporting Across Multiple Jurisdictions

The regulatory reporting obligations of financial institutions have mushroomed in scale over the past decade, leaving firms facing a raft of different requirements to provide increasingly granular metrics on their transaction, valuation and collateral data to a number of regulatory authorities. While many of these reports draw from the same core data set, the nuanced differences...

BLOG

LPA Group Acquires RegTech Acarda

Capital markets technology specialist the LPA Group has acquired the Acarda Group, a provider of RegTech solutions for asset managers, fund administrators, insurance companies and banks focusing on the automation of regulatory reporting and automated data management. The accretive, add-on acquisition was preceded by a successful collaboration and test phase starting in April 2020. Acarda’s...

EVENT

RegTech Summit Virtual

The RegTech Summit Virtual which took place in June 2020 was a huge success with over 1,100 delegates registered. We are currently working on our plans for 2021 and we hope to be back with an in-person event. Whatever the future holds you can guarantee our 2021 event will be back with an exceptional guest speaker line up of Regtech practitioners, regulators, start-ups and solution providers to collaborate and discuss innovative and effective approaches for building a better regulatory environment. Can't wait until 2021? make sure you sign up to our RegTech Summit Virtual, November 2020. More info...

GUIDE

MiFID II handbook, third edition – How compliant are you?

Six months after Markets in Financial Instruments Directive II (MiFID II) went live, how compliant is your organisation? If you took a tactical approach to cross the compliance line on January 3, 2018, how are you reviewing and renewing systems to take a more strategic approach and what are the business benefits of doing so?...