Middle East needs representation on International Accounting Standards Board
With the rise in market capitalisation of most regional stock exchanges, mandatory enforcement of International Financial Reporting Standards (IFRS) is critical, says Dubai-based accounting expert Abbas Ali Mirza, Partner, Deloitte Middle East.
Existing international accounting standards have been primarily devised for companies operating in Western markets, Mirza argues, and do not take into account cultural compatibility and economic distinctions. Economic systems in the Middle East are different to the standards prevailing in the West, and auditing standards need to be applicable in the local context for them to be relevant.
“According to regional experts, the total market capitalisation of all listed companies in the world has crossed several trillions of dollars, and listed companies in the GCC account for a significant portion of that,” explains Mirza, who will chair the World Accounting Summit in Dubai from May 29 to June 1, 2005.
“It is imperative that standard setters from the emerging markets, such as the GCC countries, are represented on the International Accounting Standards Board (IASB) so that their inputs are taken into consideration while formulating the IFRS standards. If the IASB is talking of global convergence of accounting standards, they need to understand that that there are vibrant and evolving markets in other parts of the world, other than Europe and North America, that have special features which need to be addressed.”
Accountants from 190 countries are expected to attend the World Accounting Summit at Jumeirah Beach Hotel Conference Centre in Dubai, including presidents of global accounting bodies and international standard setters.
High-level industry speakers include Graham Ward, President, International Federation of Accounts; HE Abdulaziz Rashed Ibrahim Al-Rashed, Chairman of the Board, GCC Accounting and Auditing Organisation; Dr. Habib Al Mulla, Chairman, Dubai Financial Services Authority; and Michael Rake, International Chairman, KPMG.
“By hosting a summit in Dubai, emerging markets such as the GCC will be in focus,” Mirza adds. “The World Accounting Summit is a first-of-its-kind event, and is being held under the patronage of the United Nations Conference on Trade and Development (UNCTAD) with the support of global accounting bodies such as the International Federation of Accountants (IFAC), IASB, the ACCA, UK and the ICAI, India.”
Deloitte’s Abbas Ali Mirza is the current Chairman of the UNCTAD’s Working Group of Experts on International Standards on Reporting, and the author of the internationally published book ‘Wiley: IFRS 2005’.
The Middle East is a buoyant economic bloc and the world is looking at it with keen interest. Investors are currently happy with the performances of regional stock markets, but it is essential to safeguard against market conditions that might set in if controls weaken or standards are relaxed, Mirza warns.
International support for convergence is rapidly getting stronger, notably in Europe where regulators have agreed to adopt IFRS this year. Companies in Bahrain, Jordan, Lebanon, Kuwait and Qatar follow IFRS by law, but it is mandatory for only UAE banks to abide by it.
While most companies in the UAE follow IFRS principles as part of their best practices procedures, it is not legally binding for them to do so.
“Application of IFRS principles will also boost investor confidence and go a long way to encourage foreign capital inflow into the regional economy. But how do we convey our message to IASB? The World Accounting Summit, which will feature the world’s accounting experts and standard setters, is an opportunity for us to voice our concerns. It is therefore important for accountants and the regional standard setters to be a part of this summit,” says Mirza.
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