Accountants Play Critical Role in Establishing Global Transparency
I’ve always thought the world would be a better place if only there were more professional accountants working throughout organizations. Each and every day, we bring transparency and accountability to businesses and governments around the globe. We promote financial integrity, expose wrongdoing, and lift the veil of uncertainty to shine light on the truth. When you think about it, we are much like the Swiss-Army knife for modern business—equipped to bring solutions in countless ways.
Tax work? We do that. Financial statements? We do those too. Interpreting human capital and supply chain implications of the latest regulatory standards? Your CPA has you covered.
If CPAs are like the Swiss-Army knife, then transparency is the Master Key that unlocks good business practices; transparency holds decision-makers accountable, leads to better management decisions, and provides the reliable, actionable information on which investors and the free market rely.
Imagine today’s global economy as a bowl of (very complex) soup - a mixture of stakeholders, businesses, cultures, and government policies from countries with differing standards and regulations. Add the rapid pace of change, big data (the amount of data in the world doubles every two years), and unrest in several regions throughout the world, and you begin to see that the landscape is more complex than ever. This environment is fertile ground for corruption and fraud, which means CPAs’ skills – and the transparency those CPAs promote – are more critical than ever. Accountants are the first line of defense for any business and we take that role very seriously.
In November, more than 4,000 accountants met in Rome for the World Congress of Accountants (WCOA) – a global gathering hosted by the International Federation of Accountants (IFAC) that takes place every four years as a forum for discussing important financial issues. I took special interest in a session called “Enhancing Government Transparency and Accounting” – a timely topic with everything going on in the world today.
Accountants from around the world represented more than 100 countries with differing economic systems and governments, yet there was broad consensus on the vital need for clarity and transparency in public sector reporting and financial management. As accountants, we know that enabling corruption and fraud - under any type of government - is a recipe for economic disaster. Governments need rules that incentivize good behavior, just as CEOs and CFOs do.
The sovereign debt crisis demonstrated the importance of adequate controls and transparency. Outside of the U.S., countries with strong records of government accounting – such as New Zealand and Canada – performed better than most during the financial crisis. China, meanwhile, recognized a need to promote accrual-based government accounting standards and is currently working toward a more open and transparent system.
As I listened to other countries share their stories, I couldn’t help but think about recent transparency initiatives here in the U.S. I’ll give you two examples.
In 2012, the Governmental Accounting Standards Board (GASB) issued two new pension standards; one for governmental pension plans and another for participating employers. The AICPA was a vocal supporter of these standards and what they would accomplish – a first-time requirement that state and local governments report significant pension-related liabilities on their balance sheets.
The AICPA also joined with state CPA societies in supporting the Digital Accountability and Transparency Act (DATA Act) and successfully advocated for language pointing to adoption of eXtensible Business Reporting Language (XBRL) for reporting federal budget and spending information. The AICPA has been a longtime supporter of XBRL, which makes data more readable, searchable, and moveable for easier analysis of information. The DATA Act paves the way for implementation of a system that will allow everyone to more easily track federal spending data. That’s an important goal for transparency and for any country’s public policy.
In the U.S. and around the world, accountants are playing a critical role in the push for transparency and government accountability. In today’s complex times, this is a noble and important mission.
I shared this thought in my closing remarks at the World Congress: Good accounting by itself will not solve any problems. But it will enable good decision making, and good decision making is essential for economic stability and growth.
Accountants must continue to advocate for systems and standards that foster transparency and accountability. This is a vital public interest issue where accountants should share their valuable insights and knowledge all around the globe. The AICPA is a vocal leader for that cause here in the U.S. The more accountants share and communicate these ideals, the more stable and prosperous the world can be.
Olivia Kirtley, CPA, CGMA, President of the International Federation of Accountants (IFAC). Ms. Kirtley is the first female president of IFAC, as well as the first president based in business and industry. She is a member of the AICPA’s governing Council and a former chair of the AICPA board of directors.
Transparent globe image via Shutterstock