Greg Tanzer’s long history in securities regulation makes him an
ideal candidate to lead the International Organisation of
Securities Commissions (IOSCO) during a challenging period for the
world’s financial markets. IOSCO is recognised as the international
umbrella body for securities regulators. Its membership regulates
more than 90 percent of the world’s securities markets.
Tanzer took over as IOSCO secretary general at the start of this
year following a 15 year career at the Australian Securities &
Investments Commission (ASIC), where most recently he was executive
director for consumer protection.
The Australian is not new to international securities regulation.
From 1996 to 2007 he was involved with ASIC’s international work
and for the past six years he has been chairman of IOSCO’s standing
committee on investment management.
Under the spotlight
Accounting and auditing issues such as fair value, IFRS and
International Standards on Auditing are having an increasing impact
on IOSCO and the work of securities regulators around the
world.
Tanzer says accounting continues to be one area that throws up a
range of technical and strategic challenges to securities
regulators right across international markets. He emphasised the
need to see accounting issues in their long term strategic context
and to balance that with the impact they could have on investor
confidence.
“While [accounting standard-setting] is a very technical field and
there are a lot of very proficient technicians, you could make what
you think is a small change to an interpretation, guidance, or a
standard and it could have ripple effects,” Tanzer pointed
out.
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By GlobalData“I would appeal to the accounting community, particularly when you
are dealing with regulators or raising expectations of bodies like
IOSCO, to bear in mind the longer term strategic implication.
Everyone agrees with the need for accurate, complete and
transparent financial statements, that is going to be aided by
coming up with converged accounting standards, but also we need to
see that in the strategic context which all gets back to investor
confidence.
“If you have confidence in the financial statements, you can
understand them, they are transparent and they are predictable then
that will do 80 percent of the work of restoring investor
confidence.”
IOSCO sees itself as a key stakeholder in the move towards IFRS. It
has a dedicated standing committee of officials from its technical
committee who issue comment letters on IFRS proposals and work on
other technical projects in the accounting arena. The standing
committee is chaired by US Securities and Exchange Commission
representatives.
In February, Michel Prada, chairman of the IOSCO technical
committee, released a statement urging publicly-traded companies to
provide investors with clear and accurate information on the
accounting standards used in the preparation of their
accounts.
“The recent subprime turmoil suggests that we need to continue to
improve accounting standards but I think the direction of
convergence is pretty clear,” Tanzer said.
“I think what you are seeing is you have IFRS developing and
accepted in Europe, in Australasia and starting to be accepted in
parts of the developing world, so there is momentum around
IFRS.”
Challenges ahead
Tanzer says the organisation faces several challenges over the next
year besides its general support for IFRS. One of the most
immediate tasks arises out of the subprime turmoil.
“I think you’ll see IOSCO doing some work on valuation of financial
assets, especially valuation of structured products, particularly
in illiquid market situations because I think that is an area that
has been exposed,” he said.
“That is a strategic and important piece of work but also quite a
technical piece of work to properly understand what the standards
actually require. It may be as much an exercise in communication
and industry awareness as it is in a technical assessment as to the
standards adequacy.”
The other area that requires ongoing attention is the push to
develop International Standards on Auditing.
“Auditors play a critical role in the markets, especially in the
equity markets,” Tanzer added. “The challenge is to come up with
something that is worthwhile from an international level but has
enough precision about it to qualify as a standard.”
