The true and fair view: inconvenient but essential
17 Mar 09
The G20 summit has been warned by ICAS not to dispense with transparent financial reporting for the sake of smoothing out market volatility
The Skibbereen Eagle, a tiny provincial newspaper in Ireland in the nineteenth century, was famous for its portentous editorials, one of which warned the British foreign secretary, Lord Palmerston: “The Skibbereen Eagle has got its eye both upon him and on the Emperor of Russia.”
With that example in mind I approach this week’s topic carefully, because it concerns the G20 summit, due to bring together ministers from the world’s leading economy at a meeting in the UK at the start of next month. There will be more pressure on all concerned than at any time since the G8 met at Gleneagles with an agenda including help for the developing world, especially Africa.
Now, it’s the global economy itself that needs help. This is a crisis summit and financial reporting will not, I imagine, be very high up the agenda. None the less, the G20 and their advisers should not ignore the call from ICAS today to stand firm behind inconvenient accounting concepts such as a “true and fair” view and “transparency”.
Blaming financial reporting for the series of shocks that has rocked the financial world over the past few months is simply shooting the messenger. The instinct for many financial institutions will be to do all they can to smooth out their financial results, and to ensure that, as much as possible, turbulent financial markets are not reflected in volatile year-end figures.
Anton Colella is quite right to stress that transparency is the key to ensuring that investors and managers are not allowed to sleepwalk into another economic disaster once the present one is fixed.
G20 beware. CA Magazine has its eye on you.