International Financial Reporting Standards (IFRS) were called very "Anglo-Saxon in nature" at a Japan CFO conference held in Tokyo last week, prompting support for a regional accounting practices group to influence global standards setting.
"We should talk to all the countries in this region [Asia-Pacific] and make our needs known," said Noriaki Shimazaki, a trustee on the International Accounting Standards Board (IASB) committee and an executive vice-president at Sumitomo Corporation, in regards to accounting standards. "This would benefit the implementation of IFRS."
Regional influence at the global accounting body would also ease the cost of transitioning to a new set of standards for many Asian corporates. The alternative being, as Masato Marumo, managing director at the Carlyle Group, put it, for the region's public companies to simply "delist".
There are two primary accounting standards in use around the world today -- IFRS and the US generally accepted accounting principles or GAAP -- plus numerous local standards. While many Asian countries have either adopted or converged with IFRS, including China and South Korea, there is concern that the London-based IASB, which sets IFRS standards, is too Western in its thinking. This is an unsurprising assumption given that two-thirds of its governing committee members hail from Europe and North America.
"With one common forum [Asia-Pacific countries] will enable the IASB to understand the region," said Zainal Abidin Putih, a former president of the Malaysian Accounting Standards Board and a member of the board at the country's CIMB Group, in an interview with the International Accounting Standards Committee journal Insight. "The aim of the Asian-Oceanian Standards Setters Group is to ensure that all the economies of Asia-Oceania will benefit from this joint effort."
As if reading Shimazaki's mind, representatives from China, Japan and South Korea organised the Asian-Oceanian Standards Setters Group last year and held its first meeting in Malaysia this past November.
Any notable change of global standards is still a long way out. While Shimazaki and others are moving the industry in the right direction, the standard setting process takes years. But with increasing numbers of Asia-Pacific countries either adopting or converging with IFRS, the region's growing numbers give it clout.
To date China has adopted the IFRS standards and South Korea made compliance voluntary in January 2009 with mandatory adoption required by January 2011. India plans to achieve full IFRS convergence by April 1, 2011. Hong Kong and Singapore model their reporting practices on the global standards.