The Financial Crisis Advisory Group (FCAG), a group with broad experience in international financial markets, published its recommendations related to accounting standard-setting activities and other changes to the international regulatory environment following the global financial crisis.
The FCAG was formed at the request of the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) to consider financial reporting issues arising from the crisis. Co-chaired by Hans Hoogervorst, chairman, the Netherlands Authority for the Financial Markets (AFM) and Harvey Goldschmid, former commissioner of the US Securities and Exchange Commission (SEC), the FCAG met six times from January to July 2009.
The report of the FCAG articulates four main principles and contains a series of recommendations to improve the functioning and effectiveness of global standard-setting. The chief areas addressed in the report are:
- Effective financial reporting.
- Limitations of financial reporting.
- Convergence of accounting standards.
- Standard setter independence and accountability.
Hans Hoogervorst, co-chairman of the FCAG, said: “I urge policymakers around the world to study the report and to take note of its conclusions, especially the importance of broadly accepted accounting standards that are the result of a thorough due process. The report highlights the importance but also the limits of financial reporting. Accounting was not a root cause of the financial crisis, but it has an important role to play in its resolution.”
Harvey Goldschmid, co-chairman of the FCAG, added: As our report emphasises, improved financial reporting will help restore the confidence of financial market participants and thereby serve as a catalyst for increased financial stability and sound economic growth. The independence and integrity of the standard-setting process, including wide consultation, is critical to developing high quality, broadly accepted accounting standards responsive to the issues highlighted by the crisis.”
The report of the FCAG is available from the IASB website.
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