International Accounting Reform Represents "Rare Alignment" of Finance and Humanitarian Interests

Away from the political controversies over international policy and mismanagement of extractive revenues, the International Accounting Standards Board (IASB) plays a quiet but pivotal role in steering the transparency of the energy industry. This is the body that determines what a company has to disclose in its annual financial statements.

With consultation and input from Revenue Watch, the Publish What You Pay Coalition, and other groups, the IASB has been conducting research for new and revamped accounting guidelines for extractive activity. The Board released a working draft of its proposals in August, which addresses important measures such as the requirement that companies declare financial information on a country-by-country basis.

In an interview with Accountancy Age magazine, Revenue Watch Capacity Building Director Vanessa Herringsaw said, "Investors want to see this sort of disaggregated information, they want to see the risk profile and part of the risk profile comes from your exposure in difficult countries."

Accountancy Age calls the IASB inquiry "a rare alignment of goals in the finance and humanitarian communities," but the magazine adds that the IASB's aims "are not primarily humanitarian. The organization is exploring whether the new standard would result in reputation risk and country-specific investment risk being flagged in companies' financial statements."

The proposed accounting reforms would affect companies in over 100 countries, including all of Europe, South Africa, Australia, Russia and China, setting new guidelines for reporting activity not only in their home countries, but in all countries where they operate.

As Revenue Watch and its allies prepare responses to the final IASB "Discussion Draft," due in early 2010, supporters of transparency and improved management of resource wealth should continue to send comments and recommendations to the Board. To learn how to get involved, please contact Vanessa Herringshaw of RWI (vherringshaw@revenuewatch.org) or Joseph Williams of PWYP (jwilliams@publishwhatyoupay.org), or learn more at the links below.

LEARN MORE

• Advocates for Accounting Reforms Prepare for Crucial Debate

• Global Rules Proposed May Fight Third World Corruption (Accountancy Age)

• Accounting Rules Not Suited to Fight Corruption (Financial Director)

• International Accounting Standards Board: Extractive Activities (pdf, IASB)