Is Accounting Becoming the First Truly International Profession
Harmonization of international accounting standards is making new inroads into Eastern Europe, the former Soviet Union and even the Peoples Republic of China, say IFAC leaders. As far back as the 1962 World Congress of Accountants, held in New York City, Frederic G. Donner, then chairman and chief executive officer of General Motors, called accounting "the most international of all the professions." Since that time, the profession has gone to great lengths to fit that description. International standard-setting organizations, such as the International Federation of Accountants and the International Accounting Standards Committee, were formed and issued international accounting, auditing and ethical standards that have gained wider acceptance with each passing year. In a Journal interview conducted shortly before the 1992 World Congress of Accountants convened in Washington, D.C., this month, Bertil Edlund, outgoing president of the International Federation of Accountants (IFAC), said, "The global accounting profession is becoming a reality." Edlund, new IFAC President Peter Agars and Director General John Gruner spoke of progress toward harmonization of accounting standards in many areas of the globe, including the EC, Eastern Europe, China and the Pacific Rim. EC UNION SLOWED BUT NOT HALTED The IFAC leaders agreed that CPAs with clients or companies involved in European Community (EC) markets need not attach too much significance to the Danish rejection of the Maastricht treaty (which will take effect only after it has been ratified by all 12 members) on European political and monetary union. For example, Edlund viewed the treaty rejection as a "political, not an economic or business, issue." He did not foresee any impact on the gradual dismantling of customs and trade barriers between EC countries. "The EC business communities already have taken the steps necessary to increase trade between members. Even companies in my country, Sweden--still outside the EC--have prepared for it. To them, a single European market is already a fact of life." He added Sweden will join the EC whether the Maastricht treaty is ratified or not. Agars seconded the view that the issues raised by Denmark's Maastricht vote are political rather than a roadblock for business. "As I understand it," he said, "Maastricht was an attempt to speed up the process of creating a political and monetary union at a time when it was lagging in some areas. I don't think the Danish vote will change the direction or slow the pace of the EC movement dramatically. If there is an impact, it will be largely in the political arena, and business and trade don't always recognize national borders/ A TEMPORARY MERGER SLOWDOWN It appears that U.S. CPA clients or companies that have postponed merger or joint venture negotiations are not alone. Mergers in EC nations also have slowed. Edlund and Agars expressed the belief that a recent decline in the number of such negotiations between EC countries and the United States was primarily due to recessions in Europe and the United States rather than evidence of a lack of interest. Edlund looks for a quick recovery in merger activity between U.S. and EC companies. He said, "I know of merger discussions now going on between substantial international companies to enable them to compete in the single European market. After all, it's a market of 340 million people and, with new members, will shortly grow to 400 million, making it the largest market in the world. And that's a reality all U.S. business owners and CPAs must face up to." Agars suggested postrecession international business combinations might take on a different cast from those consummated before the recession. He said, "Companies that have been belt tightening and slimming down during the recession are not likely to want to return to former work force levels when the economy turns up again. …