On 6 March, ICAEW signed an agreement with the Gulf Co-operation Council Accounting and Audit Organization (GCCAAO) to help them set up and run an Audit Quality Monitoring Programme across all six GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE). This is obviously exciting – it is the first time such a task has been undertaken in the Middle East – but just as interesting is what it represents. The Middle East is fast becoming a financial and business hub for the world.
For many years now it might have seemed to outsiders that the GCC countries were content to rest on their laurels, safe in the knowledge that they had all the money they could possibly want in the form of oil. But oil wealth came late to the region – the first oil discoveries were made in the early 20th century, and the first barrel of crude from what is now the UAE was not exported until the 60s.
The economic development of the GCC, measured in global terms, has been swift. The last few years have seen a rapid expansion in non-oil activity, with GCC governments pledging to diversify their economies away from hydrocarbons. Dubai is already a large and important financial services centre, Qatar is seeing a huge boost in construction and tourism, and Saudi Arabia and Oman have pledged to increase their spending on education and skills in order to ensure the nationals have the skills they need to work in the private sector – in the latter case by an eye-watering 40% year-on-year. In this climate, a decision to consolidate audit quality monitoring across all every GCC nation is not just a recognition high quality and comparable financial information underpins business. It also suggests that the GCC is starting to act as a region.
This same recognition has been seen elsewhere; the Association of South East Asian Nations (ASEAN) is also becoming a more coherent economic force. The individual countries are seeing an ever-increasing amount of their economic growth come from trade with each other, rather than with traditional partners such as the EU or the US. In 2010, the ASEAN-China Free Trade Area came into effect, creating the largest Free Trade Area by population in the world. By 2015 it is estimated that for the first time in 500 years the East will be responsible for a greater share of global GDP than the West.
Accountancy within ASEAN is overseen by the ASEAN Federation of Accountants (AFA), which ICAEW was invited to join last year. Increasingly, pan-national accounting bodies are becoming important as comparability and consistency across national boundaries – the bedrock of international trade – is recognised as a vital part of doing business. So what does this mean for the profession?
It has never been more important for accountants to think internationally. Chartered accountants are more likely to work on cross-border transactions or with international firms. Having an understanding of international finance reporting and business practices is fast becoming a prerequisite, and having an internationally-recognised qualification is vital. Increasingly, it is becoming part of an accountancy career path to spend some time overseas.
Thinking internationally is certainly absolutely vital for accountants planning to reach senior management levels. It is a cliché to say that the world is shrinking, but as business becomes ever-more global, and as the balance of power continues to shift, it is likely that the importance attached to the nation state will start to wane. However, what will remain fundamental to the DNA of international trade is quality. This is why recognised skills and professional standards will always be the best benchmark – and ultimately a foundation for global trade.
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