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At this point, it is still too early to judge whether the attempt to make IFRS the dominant global accounting language can succeed on an enduring basis. But there are already important lessons that have wide significance beyond the community of accounting professionals.
First, global financial rules are not a Utopian vision but a reality. The initial success of IFRS has been remarkable. Their adoption has been smooth and has generally improved financial reporting quality, starting in the European Union in 2005 but increasingly now in other countries as well. Given the right conditions, financial regulatory harmonisation can work across continents.
Second, the crisis has increased the need for public oversight of financial rules, but it is not yet clear how this can be done effectively and consistently. A so-called monitoring board of public entities has been created in 2009 to control the IFRS Foundation, but its construction is awkward and raises concerns about its legitimacy and future effectiveness. For the foreseeable future we will have to rely on trial-and-error experimentation for international financial regulatory bodies, which in most cases cannot take existing national arrangements as a direct model.
Third, those global bodies that exist have yet to adapt to the ongoing rebalancing of the financial world. The IFRS Foundation is registered in America, its staff is in London, and it still caters largely to audiences in the US, European Union and Japan even as large emerging economies represent a rapidly increasing share of global finance. We don’t know whether or how China, India and others will take responsibility at a global level for transparency and integrity in financial reporting. But if efforts to empower them in formal global institutions are not accelerated, it is hard to see how such institutions can fulfill their potential.