This August, the International Accounting Standards Board (IASB) released a working draft of its new guidelines for extractive activities. Accounting standards regulate the information companies must publish in annual financial reports, including a company's property, payments, revenues, profits and losses. Reforms supported by Revenue Watch, PWYP, and a community of transparency advocates would require that companies report key information such as payments to governments, production, costs, reserves, key subsidiaries and properties, on a country-by-country basis. These disclosures would enable comparisons between countries and companies and create a powerful tool for citizen oversight of resource-dependent governments, as well as for companies, investors and tax authorities.
If successful, the proposed International Accounting Standards reforms would be applicable in more than 100 countries, including all of Europe, South Africa, Australia, Russia and China, meaning that any company registered or raising capital in these nations would be required or permitted to follow this rule, wherever they operated in the world. As a result, a company such as Shell (which is listed on the London Stock Exchange), would have to report this information for every country in which it operates, and citizens of these countries could determine what Shell is paying their government by reviewing the company’s financial report. Other notable countries, including Canada, the US and Brazil are moving towards convergence with the IASB, rendering the new standards a practical global standard.
The new IASB working draft includes substantial discussion of proposals by the international Publish What You Pay (PWYP) coalition that would require all revenue payments, including signature bonuses, production payments, royalties and taxes, to be disclosed on a country-by-country basis. The draft also includes supporting comments from investors on the usefulness of country-by-country disclosure, adding an important element of support in determining the acceptance of the new standards.
Various civil society groups, including RWI, PWYP, the Catholic Agency for Overseas Development, Care International and Global Witness, are now preparing to respond to the official publication of the IASB "Discussion Draft" in early 2010, and the six-month period of formal comments and consultation that follows. During this time, it will be critical for civil society to send in letters in response to the discussion draft and that investors write in support of accounting standards reform. Based in part on these comments, the IASB will decide its agenda for the standards in December, 2010.
This is a crucial time for civil society to work with investors, as well as supportive companies, to continue building support for this reform. Please contact Vanessa Herringshaw of RWI (vherringshaw@revenuewatch.org) or Joseph Williams of PWYP (jwilliams@publishwhatyoupay.org) to learn how you can help.
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