The world needs to adopt a common set of accounting and governance standards to help companies and markets around the world to understand each other and to better avoid future crises, top accountants and business leaders say. A common problem emerging from the financial crisis has been a lack of understanding between western investors and companies in other regions over accounting standards and other practices.
"There is a need for a new definition of balance sheets," said Abbas Ali Mirza, a partner at Deloitte and Touche Middle East at an industry forum in Dubai. "We need Esperanto for accounting, a whole new accounting language to deal with issues of the changing economic environment." Abdulla al Awar, the chief executive of the Dubai International Financial Centre, said improvement was needed in areas of corporate governance, regulations, accounting standards and financial reporting.
"The key solution we can draw from the crisis is converging financial standards," he said. Currently, companies can adopt Britain's rules-based International Accounting Standards Board, or the American principle-based Financial Accounting Standards Board. Mr Mirza called for the UAE to adopt a mix of principle-based regulations and a defined set of guidelines that are not too loose but at the same time not so restrictive as to inhibit progress, especially during the recovery.
"I think a mixed approach between principles and rules will be best thing for the UAE," he said. email@example.com