KARACHI, Dec 15: Ever since the emergence of International Accounting Standards (IAS)—which have now transformed into International Financial Reporting Standards (IFRSs)—the regulators and professional accountants in Pakistan have continued to debate the question on how far do national accounting rules in the country conform to them. Or sometimes, it is even asked whether it is necessary to comply and if so to what extent?

Many people then begin to wonder how far other countries around the world prepare their accounting statements in accordance with the IFRSs. All these questions are answered in the General Accounting and Auditing Practices (GAAP) 2001 Report, released by the seven largest accountancy firms this week.

On Friday, Aki Fujinuma, President of the New York-based International Federation of Accountants (IFAC)—the worldwide organization for the accountancy profession with membership of 150 professional accountancy bodies in 62 countries (Pakistan included), representing 2.4 million accountants—commented that the Report represented another critical step towards encouraging the harmonising of international accounting standards and ultimately, the establishment of a single global financial framework.

“The development of such a framework is vital to the efficient operation of global capital markets,” Fujinuma said.

The Report compares national accounting standards with International Financial Reporting Standards (IFRSs) in 62 countries. It also includes an analysis of changes and progress made in each country since GAAP-2000 report was issued.

The 62 countries surveyed represent more than 95 per cent of the world’s Gross National Product and stock market capitalisation. Significant findings include: About one-third of the countries surveyed show progress in closing the

gap between national and international standards; about half of the countries surveyed have not implemented or proposed standards to reduce the difference; most of the major differences can be attributed to a relatively small number of standards, perhaps eight in all; one of the most important differences centres on related party disclosure, which is of great interest to investors and parties interested in good corporate governance.

The IFAC President observed that globalization of business and commerce had highlighted the inadequacy of financial reporting and auditing in accordance with purely national standards.

“Decision makers need assurance that the financial information on which they base their decisions is transparent, consistent, comprehensive and comparable across national boundaries,” says Fujinuma.