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April 28, 2009

G20 pledge to back global standards and tackle tax havens welcomed

By Nicholas Moody

G20 support for a single set of standards and pledges to crack down on tax havens have been broadly welcomed by the Institute of Chartered Accountants in England and Wales (ICAEW) and European tax group Confédération Fiscale Européenne (CFE).

The communiqué of world leaders from their April meeting called on accounting standard setters and regulators to improve standards on the valuation of financial instruments and provisioning, and to achieve a single set of high-quality global standards.

ICAEW head of financial reporting Nigel Sleigh-Johnson said despite concerns about certain aspects of financial reporting in the financial crisis, the support for co-operation between the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board to produce one set of global standards was clear.

“In a way it is a vote of confidence for the IASB. It might have a lot of caveats but it is really of quite fundamental importance,” he said

Sleigh-Johnson added that the emphasis on one set of standards would not go unnoticed by jurisdictions, particularly the US, that are looking to move to IFRS.

“The US Securities and Exchange Commission have a lot of factors to consider, apart from the convergence issue,” he said. “They will have taken note that the G20 is generally behind this move to a single set of standards and hopefully that will encourage them to make some positive decisions.”

The G20 leaders also issued a declaration calling on uncooperative tax havens, blacklisted by the Organisation for Economic Co-operation and Development, to adopt the international standard for information exchange. CFE president Stephen Coleclough said the declaration to increase the sharing of bank information was more significant than naming and shaming blacklisted countries.

“[The declaration] is going to force people who rely on obfuscation and lack of transparency to re-appraise their whole environment and come into the mainstream. It is levelling the playing field across the world so that everybody knows what everybody’s got and where they are,” he said.

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