Financial reporting standards were a decade behind the reality of world markets, Senator Ian Campbell, Parliamentary Secretary to the Treasurer, told a meeting of IMF governors in Washington today.
He said the rapidly changing composition of markets, especially the growth of derivatives, underscored the need for global accounting standards.
"I congratulate the European nations for setting 2005 as their target to achieve this objective. It is a target Australia will also be working towards," he said.
"However, unless there is a strong commitment by other nations, particularly the United States, the full potential of harmonisation will not be realised and risks will remain about the quality of disclosure."
Senator Campbell said earlier remarks to the meeting by the chairman of the US Federal Reserve, Alan Greenspan, that the US economy was holding about $US100 trillion in derivatives supported his view that financial reporting was badly lagging behind the markets.
Financial instruments such as derivatives were forming vital parts of world economies but were not being properly accounted for under existing frameworks.
"These are new, powerful factors in a rapidly changing world and it's imperative they are addressed as a matter of urgency if we are to reach international consensus about how to ensure sound corporate and securities regulatory frameworks," he said.
A total of 24 nations were represented at the meeting of the Fund's international monetary and financial committee.
Senator Campbell has been meeting with congressional leaders and key regulators for the past two days on financial services reform issues such as audit independence, accounting standards and continuous disclosure.
He will attend a meeting of the development committee at the World Bank tomorrow.
PERTH
21 April 2002
Further information:
Wayne Grant, Senator Campbell's Office
08 94211755 or 0407 845280
http://parlsec.treasurer.gov.au