Standard & Poor's in a new report has issued a call for a single set of principles-based global accounting standards.

S&P said it has consistently supported global convergence toward a single comprehensive reporting standard, believing the current financial reporting system is inadequate to satisfy analysts' needs.

"We recognize the hurdles to be overcome, and understand the process may not result in a quick fix," the report said.

A single accounting standard will not appear in the form of a pure U.S. Generally Accepted Accounting Principles or International Financial Reporting Standards set of accounting standards, S&P said.

"Rather, the resulting framework will be an evolution of the accounting systems currently in place," the report said.

Neri Bukspan, S&P managing director and chief accountant, said a phased-in principles-based approach is the appropriate solution to the financial reporting quandary.

"When accompanied by robust disclosures, it will provide the flexibility necessary to address the ever-evolving and complex business environment and each company's unique strengths, weaknesses, and business and financing approaches," he said.

Mr. Bukspan added that greater coordination among regulators, accounting standard-setters, analysts, companies, auditors and other stakeholders will likely lead to a financial reporting discipline that will be globally accepted and consistently applied.

"It should be a system capable of meeting the information needs of investors and creditors, and of supporting the evolving global capital markets for many years to come," he said.

Ron Joas, an accounting specialist and director at Standard & Poor's as well as co-author of the article, said the greatest roadblock to full acceptance of convergence may be cultural, in the form of unwillingness to relinquish control over standard-setting.

"However, with the increased prominence of financial markets outside the United States, change within the United States is inevitable," he said.

Special Reports /

An Argument For Global Accounting Rules

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