top stories

Share

ACCA (the Association of Chartered Certified Accountants) today issued a new policy paper titled, "The Future of Financial Regulation in the U.S," citing the need for U.S. financial institutions to take steps to gain further transparency, innovation in an effort to restore global stability.

In the paper, ACCA recommends that U.S. universities and colleges need to stress the importance of teaching IFRS (International Financial Reporting Standards) otherwise businesses will suffer.

Offering ten clear areas in which the new IFRS rules should evolve along with the financial services themselves, ACCA cites the importance of regulating by function rather than institution. International cooperation and global governance reform should also be key considerations.

"International standards are a problem looming on the horizon," said Paul Costello, Head of USA and Canada, ACCA. "Many questions remain to be answered as 2009 moves inevitably towards greater regulation of the financial services industry across the world."

Key takeaways from the paper include:

1.Regulatory structures need to be redesigned to increase transparency in the operation of specific markets and financial institutions.

2.Federal agencies, numerous self-regulatory organisations, and hundreds of state financial regulators have not kept up with key developments in financial markets and products.

3.Implicit government involvement and tight regulation have been proven not to be a panacea - for example, in the case of government-sponsored enterprises such as Fannie Mae and Freddie Mac.

4.Regulators are likely to begin considering the sustainability of sectors and business models more broadly, rather than considering single institutions. They may also begin regulating large institutions than cross international borders, as unified entities. It would be productive to use forums such as the Financial Stability Forum to establish common principles for regulation and to allow each country to apply those principles, taking account of domestic circumstances.

5.A key issue is the need to separate the activities of retail (i.e. taking deposits and making loans) from all other forms of banking, although calls for an absolute separation between the two forms are unlikely to be met immediately.
6.Regulatory overbearance can kill innovation, so it is vital that the right balance is struck.

7.Principles-based standard setting and professional judgement have a vital role to play and should not stifle recovery.

8.On US use of International Financial Reporting Standards (IFRS), whatever the Securities and Exchange Commission (SEC) decides, US universities and colleges are not equipped to teach IFRS to accountants, and of existing accounting practitioners, most are unfamiliar with IFRS and have few places to retrain.

9.There are many and various global governance issues that need to be considered, including: the need to improve co-ordination at global level; the design and implementation of a global early warning system which will pick up on future risks to global economic and financial stability and ensure that avoidance measures are taken early; globally accepted standards of supervision and regulation applied equally and consistently in all countries; and effective cross-border supervision of global firms, possibly through international colleges of supervisors; and the need to review the role of international financial institutions.

10.Tax havens are also receiving increased international scrutiny due to the financial crisis, and Obama is likely to join with Brussels and London in regulating these more tightly.

To access "The Future of Financial Regulation in the U.S." policy paper, please visit http://www.accaglobal.com/publicinterest/pressandpolicy/unit/us_briefings <http://www.accaglobal.com/publicinterest/pressandpolicy/unit/us_briefings>

- ends -

About ACCA
ACCA is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people around the world who seek a rewarding career in accountancy, finance and management. Globally, we support our 131,500 members and 362,000 students throughout their careers, providing services through a network of 80 offices and centres around the world. We have 11 chapters across the US which meet regularly in the following cities and areas: Boston, Chicago, Houston, Dallas, New York-New Jersey-Connecticut Tri-State area, Philadelphia, Los Angeles-Southern California, San Francisco-Northern California, South Florida, Atlanta, and Virginia-Maryland-DC.

---

For further information please contact:

Helen Thompson, ACCA Newsroom +44 (0)20 7059 5759 +44 (0)7725 498654 helen.thompson@accaglobal.com

Andrew Worob Ruder Finn Public Relations for ACCA Tel: 212-715-1536 (o) Email: woroba@ruderfinn.com