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Continued efforts to sustain global regulatory convergence are critical for the evolution of a sound, global financial system. Convergence assists in providing solutions to problems highlighted by the global financial crisis and contributes to greater economic certainty and financial stability. To be effective, global convergence requires the support of a broad range of key stakeholders—including politicians, governments, regulatory bodies, and professional accounting organisations—at the national and international levels.
“Global convergence is a significant issue in the current debate about regulatory reform and responses to the financial and sovereign debt crises”, said IFAC Chief Executive Officer Ian Ball. “Crucially, convergence helps users compare financial information, minimises the effects of systemic economic risks, reduces information costs, and decreases opportunities for regulatory arbitrage.”
IFAC believes that the global public interest is best served by consistent global adoption and implementation of high-quality, internationally accepted financial reporting, auditing, assurance, public sector accounting, accounting education, and ethics standards (including independence requirements for auditors), and by use of these standards for reporting financial information for capital and debt markets. The process of convergence involves national and regional standard-setters and regulators either adopting international standards or modifying their own standards to achieve consistency with agreed global norms.
In addition, the public interest is served when regulatory arrangements involving auditor registration and licensing requirements, the public oversight of auditors of public interest entities, and arrangements that promote greater cross-border trade-in-services are globally consistent and based on cooperation and mutual recognition.
“Successful global solutions require national governments and regulators to avoid the temptation to implement legislative and regulatory reforms without considering the global agenda, and without a serious commitment to cooperating with national and international counterparts”, continued Mr Ball. "Reforms that have extra-territorial impacts, or regulatory actions that require entities to potentially violate or bypass the laws of other countries, exacerbate current problems in the global financial system."