x Abu Dhabi, UAEThursday 27 July 2017

GCC cooperation adds up to a plus

Building regional commercial blocs, and a sound international financial system, begins with common-sense approaches such as common audit standards.

The GCC countries have taken a modest but worthwhile step towards the goal of coordination and transparency in financial matters. Book-keeping may not be the most exciting subject for most people, but integration of audit and accounting practices is a brick in a new edifice of open, efficient financial markets - and a practical element of GCC integration as well.

Sultan Al Mansouri, the UAE's Minister of Economy, made the point this week in Dubai, where he encouraged the GCC countries to speed up this integration.

He was commenting on an agreement between the GCC's Accounting and Auditing Organisation and the Institute of Chartered Accountants of England and Wales. The two organisations will work together to ensure that accounting and auditing are harmonised across the region.

The English/Welsh accountants' group has an interest in spreading its methods in the region, of course - more jobs for its members - and other systems in use elsewhere in the world also deserve consideration. But the main point is to move GCC integration along in a practical way. The simpler the world of accounting is, and the better countries and regions understand each other's methods, the less friction there will be in the increasingly complex global economy.

Since the GCC was founded, in 1981, the six member states have seen the benefits of cooperation - in security matters, largely, but also in work on a railway network, for example.

But the six countries have also learnt the limits of cooperation. In theory, a customs union exists but problems persist. A monetary union, although proposed, would raise serious problems and is apparently stalled.

Further benefits from GCC unity, just like broader progress in worldwide financial coordination and transparency, can be built only upon consensus and a prudent framework. At present, differences in financial reporting standards worldwide have not been resolved, leaving unnecessary confusion that puts a brake on the expansion of global markets.

At all levels, trade ties that strengthen unity and prosperity demand that companies and auditors speak the same financial language.

Many accounting standards are available, most of which can serve nicely. All that is required is for all parties to sit down and work out the details.