Accountants Need to Work Hard to Restore Credibility
30 May 2005DUBAI — The accounting profession has not yet fully recovered from the major credibility setbacks it suffered from international corporate scandals such as: Enron, World Com, and Parmalat, to name a few, and thus, the international professional bodies need to work together to restore the credibility of the profession, said Talal Abu-Ghazaleh, President of the Arab Society of Certified Accountants (ASCA) in Dubai, yesterday.
Speaking at the World Accounting Summit in Dubai, Abu-Ghazaleh said: “The last few years have seen the standing of the accounting profession in the public eye if not at its lowest ever than certainly as low as far back as I can remember. Hopefully, as a result of action by International Accounting Standards Board (IASB) and International Federation of Accountants (IFAC) it is recovering, but it is still too low for comfort.”
Although the internationally acceptable standards in the profession will go a long way in enhancing the credibility of the profession, he said the acceptability of any standard is a function of the quality and status of who sets the standard, who applies the standard and who monitors the implementation of the standard.
IFAC now has a Public Interest Oversight Board (PIOB) which aims to ensuring quality stability, and integrity in companies and world markets. Abu-Ghazaleh called for effective regulation of the profession to restore public's confidence. “The reforms proposed so far are based on the traditional model of the accounting profession, which has, as at its roots, the concept of self-regulation. I believe that the movement away from self -regulation is inevitable and instead of resisting it the profession should embrace it, otherwise, we will face continuous demands for more regulation and a plethora of regulatory bodies,” he said.
In the US, the Public Company Accounting Oversight Board (PCAOB) is a private non-profit corporation and was created by the Sarbanes-Oxley Act of 2002 to oversee the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair and independent audit reports. It is overseen by the Securities Exchange Commission (SEC). Similar developments are expected to take shape in several other countries.
The accounting profession is subject to the World Trade Organization (WTO) which has all the power needed to regulate it. By the WTO definition, accountancy services are a trade which, like any other trade in goods or services, is governed by the WTO rules of trade liberalization and market access. While existing recommendations deal with fairly general principles, this is only a start and more could follow.
In this context, he said IFAC and IASB should actively seek a new role under the governance of the WTO. Speaking about the need for unifying the world accounting curriculum, he said, there is an urgent need to develop minimum qualification standards. Globalization and the liberalization of capital markets have implications for accountants and auditors.
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