AICPA Says Uniform Accounting Standards Will Encourage Global Capital Flow.

Business Editors

WASHINGTON, D.C.--(BUSINESS WIRE)--June 7, 2001

Current Financial Reporting Model Should Be Modernized As Well

The American Institute of Certified Public Accountants (AICPA) testified today that uniform international accounting standards will encourage the global flow of capital, but that standard setters, regulators, and the accounting profession should carefully consider the need to modernize the financial reporting system as well.

In testimony before the House Committee on Financial Services, Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, Robert K. Elliott, Immediate Past Chairman of The AICPA, said:

"Globally compatible financial presentations will make it easier for investors to compare companies and for companies to file in different markets. International accounting standards are critically important, but are not enough. We must also allow for a frequency and richness of disclosure that is closely aligned with the pace and nature of change in corporate prospects in our information age.

"Investors around the world need information that allows them to make good decisions. Capital flows are based on decisions by investors, and capital flows do not serve economic growth unless they represent economically useful decisions.

"The current financial reporting process - in the U.S. and overseas - is very much based on the assumption that profitability and growth depend on the physical assets needed to produce tangible products. This is the financial reporting model of the industrial age.

"We are no longer in an industrial age. We still have elements of it in our economy, but value today is founded upon new technologies, globalization and intangibles such as brands, relationships, people, systems and knowledge. Reporting should not be limited only to financial information that looks back. Corporate prospects no longer vary just annually or quarterly, as capabilities for rapid disclosure are coming into being.

"More can and should be done to provide investors with relevant and timely financial and non-financial information, reflecting both tangible and non-tangible assets. Without doubt, internationally accepted accounting standards will help international flows of capital, but I ask all relevant parties to carefully consider modernizing the business reporting model as well."

A copy of Mr. Elliott's testimony and bio can be found on the AICPA website at http://ftp.aicpa.org/public/download/news/elliott_6_7.pdf.

The AICPA (www.aicpa.org) is the national, professional organization of CPAs, with more than 330,000 members in business and industry, public practice, government, and education. It sets U.S. auditing and professional ethical standards and, with the Financial Accounting Standards Board, U.S. accounting standards. The AICPA is the first national, professional association to be ISO 9001-certified, in recognition of its quality management and assurance practices.