(Raft) Protecting Stakeholders

[New Vancouvia]

Free Trade, Mild

The World Assembly,

Recognizing the international scope of many companies presently conducting business and trade in our member nations;

Perceiving the existence and prevalence of many international exchanges wherein international companies' stocks are listed and traded, and firmly expressing the great value of a knowledgeable marketplace in which publicly traded companies' financial information is presented for investors and other stakeholders in a clear, relevant, and useful manner;

Emphasizing the benefits to stakeholders when companies' financial information is accurate, reliable, relevant, consistent, representationally faithful, and timely;

Mandates that all publicly traded companies in member nations disclose financial information in a financial report published at least annually but preferably quarterly, and requires that this financial report presents all material financial information in an accurate, reliable, relevant, consistent, representationally faithful, and timely manner;

Requires that all publicly traded companies in member nations be externally audited by an independent, unbiased, and professional auditing agency in regular and reasonable intervals, and that the results of these audits be made publicly available for all stakeholders;

Recommends that non-publicly traded companies issue financial reports and submit themselves to audits in the manner described above as well;

Advocates that any publicly traded company which fails to disclose financial information in an adequate manner, or misleads stakeholders with materially false financial reports, be removed from their trading exchange until such time as they have rectified their financial reporting practices;

Excludes from these standards any company which lacks international stakeholders;

Holds member nations responsible for overseeing and enforcing these standards in their respective exchanges.

[Araraukar]

OOC: Brain's too tired to deal with anything to do with accounting, so leaving that for others, but I was just wondering why you're posting on your puppet? Your main nation is the one in WA after all.

[New Vancouvia]

Using this nation for all WA things so I can keep track of it all easier in the future

[Normlpeople]

"I can see if the corporation is traded on a foreign exchange, however, I do not see why nations are incapable of setting their own standards for domestic trading.

Perhaps the line between the two could be made clearer? As it stands it falls into domestic micromanagement a bit too much for my liking."

[We Couldnt Agree On A Name]

We have no objections at this time and are willing to offer our tentative support.
Am I right in thinking this is categorized under free trade on the grounds that inconsistent standards act as a barrier to trade?

"I can see if the corporation is traded on a foreign exchange, however, I do not see why nations are incapable of setting their own standards for domestic trading.

Perhaps the line between the two could be made clearer? As it stands it falls into domestic micromanagement a bit too much for my liking."

Well, even if a company is only traded domestically there is a benefit to having a consistent standard by which to compare it to internationally traded companies. As written nothing precludes a nation from having it's own reporting standards as well.

[Bananaistan]

"We would view this as an unnecessary imposition on our listed companies which will only increase the costs of doing business. With this in mind, we do not believe the category is accurate. The proposal enforces requirements on businesses, it does not increase economic freedoms.

"We would also question the feasibility of a committee of gnomes being able to achieve the convergence of the accounting standards of 20,000 odd member states. Plus, there is no direction given in the draft as to what areas the gnomes should concern themselves with or what the general policy should be. We are never fans of the WA outsourcing member state's competencies and decision making to WA committees.

"As it stands, the People's Republic of Bananaistan will be opposed."

- Ted Hornwood

[New Vancouvia]

"We would view this as an unnecessary imposition on our listed companies which will only increase the costs of doing business.

Of course it will increase the costs, but it will benefit all stakeholders in the long run.

We have no objections at this time and are willing to offer our tentative support.
Am I right in thinking this is categorized under free trade on the grounds that inconsistent standards act as a barrier to trade?

That's right, by increasing consumer confidence in international companies and exchanges, it reduces barriers to free trade.

[Bananaistan]

"We would view this as an unnecessary imposition on our listed companies which will only increase the costs of doing business.

Of course it will increase the costs, but it will benefit all stakeholders in the long run.

OOC: That has no relevance whatsoever to the debate. In any case, I can just as easily link you to a long list of disadvantages of that act, starting with the criticisms section of that wiki page. The point is that your proposal is not a free trade proposal as it decreases rather than increase economic freedoms.

[New Vancouvia]

Of course it will increase the costs, but it will benefit all stakeholders in the long run.

The point is that your proposal is not a free trade proposal as it decreases rather than increase economic freedoms.

"A resolution to reduce barriers to free trade and commerce."

The category doesn't have to do with economic freedoms; it has to do with reducing barriers to free trade. And this certainly does reduce barriers to free trade. Corruption, fraud, and mistrust being some of those barriers that this will reduce.

[Bananaistan]

The point is that your proposal is not a free trade proposal as it decreases rather than increase economic freedoms.

"A resolution to reduce barriers to free trade and commerce."

The category doesn't have to do with economic freedoms; it has to do with reducing barriers to free trade. And this certainly does reduce barriers to free trade. Corruption, fraud, and mistrust being some of those barriers that this will reduce.

Perhaps I could refer you to the explanation of the category rules:

These are almost exactly opposed types of resolutions. Both affect Economic freedoms. "Free Trade" increases Economic freedoms while "Social Justice" reduces Economic freedoms. "Social Justice" increases government spending on welfare and targets living standards. Economic freedoms primarily discuss how much regulation there is on business/industry or how much government spending goes to helping poor/sick people. Total Economic freedom is Laissez-faire Capitalism. Zero Economic freedom is a completely government-controlled economy. Creating a Food and Drug Administration in all WA member nations, or creating a Securities and Exchange Commission in all WA member nations is imposing a mild form of Economic control, and therefore a mild reduction of Economic freedoms; you're imposing restrictions on what businesses and industries may do and you're moving away from a completely-uncontrolled Laissez-faire system.

Edit: I also like some form of explanation or rationale of how the committee are supposed to produce a coherent set of accounting standards by "converging" all extant accounting standards in member states. I just can't see that it's possible.

[New Vancouvia]

I'll refer you to this http://www.nationstates.net/page=WA_pas ... /start=176 which is very similar and is Free Trade, just as this should be.

[Bananaistan]

OOC: Perhaps you might actually answer my substantive points?

I'll list them out again to make it easy for you.

1) Just how feasible is it for any committee to converge the accounting standards of 20,000 member states? Is it even possible to do so when certain systems may have diametrically opposite ways of accounting for the same transactions? And don't forget that many member states may not even use currency, or may state their accounts in units of bubblegum or unicorn farts or whatever.

2) Your draft enacts regulations on individuals and organisations. How does this increase economic freedoms? Hint: explain this instead of just linking to other material, such as GAR#177.

3) Please justify why we should allow a committee to decide what the accounting framework in each member state should be? Why can't member states do this themselves when they have a far better knowledge of what they need in their own countries to suit their own circumstances and culture rather than some behemoth of a one size fits all policy which would only end up tying everyone up in red tape. Additionally, tax law will in each member state will remain the same. But now everyone will have to translate their financial statements from this WA standard to their own local standard. It's just unnecessary cost which destroys trade rather than increasing it.

[Imperium Anglorum]

OOC: Perhaps you might actually answer my substantive points?

I'll list them out again to make it easy for you.

1) Just how feasible is it for any committee to converge the accounting standards of 20,000 member states? Is it even possible to do so when certain systems may have diametrically opposite ways of accounting for the same transactions? And don't forget that many member states may not even use currency, or may state their accounts in units of bubblegum or unicorn farts or whatever.

2) Your draft enacts regulations on individuals and organisations. How does this increase economic freedoms? Hint: explain this instead of just linking to other material, such as GAR#177.

3) Please justify why we should allow a committee to decide what the accounting framework in each member state should be? Why can't member states do this themselves when they have a far better knowledge of what they need in their own countries to suit their own circumstances and culture rather than some behemoth of a one size fits all policy which would only end up tying everyone up in red tape. Additionally, tax law will in each member state will remain the same. But now everyone will have to translate their financial statements from this WA standard to their own local standard. It's just unnecessary cost which destroys trade rather than increasing it.

OOC: I have the same concerns on all points. A point-by-point by the author would be very helpful on this front.

[Araraukar]

A point-by-point by the author would be very helpful on this front.

OOC: And a small miracle, at that.

[New Vancouvia]

OOC: Perhaps you might actually answer my substantive points?

I'll list them out again to make it easy for you.

1) Just how feasible is it for any committee to converge the accounting standards of 20,000 member states? Is it even possible to do so when certain systems may have diametrically opposite ways of accounting for the same transactions? And don't forget that many member states may not even use currency, or may state their accounts in units of bubblegum or unicorn farts or whatever.

2) Your draft enacts regulations on individuals and organisations. How does this increase economic freedoms? Hint: explain this instead of just linking to other material, such as GAR#177.

3) Please justify why we should allow a committee to decide what the accounting framework in each member state should be? Why can't member states do this themselves when they have a far better knowledge of what they need in their own countries to suit their own circumstances and culture rather than some behemoth of a one size fits all policy which would only end up tying everyone up in red tape. Additionally, tax law will in each member state will remain the same. But now everyone will have to translate their financial statements from this WA standard to their own local standard. It's just unnecessary cost which destroys trade rather than increasing it.

Accounting isn't concerned with the type of currency used; it's irrelevant. Converging standards is very possible, even if there were billions of states; the creation of a system doesn't need to take in account all the different types of varying and extreme "systems" used: it needs to be a "coherent, adoptable, and straightforward set of accounting standards in which financial information must be presented by publicly traded companies in an accurate, reliable, relevant, consistent, and timely manner." That is a general but specific enough description of a well-made financial reporting system.

I've already explained why this is a resolution to reduce barriers to free trade and commerce. Just like lots of other free trade resolutions it enforces national standards to make international trade more accessible and free.

Accounting is a fairly universal concept, especially accounting in member states that actually have stock exchanges. And this doesn't enforce a one size fits all policy because of the line "a level at or above the standards set by the IFSB." Naturally, any corporation can continue their own financial reporting standards if they are already acting above par.

[Bananaistan]

Accounting isn't concerned with the type of currency used; it's irrelevant. Converging standards is very possible, even if there were billions of states; the creation of a system doesn't need to take in account all the different types of varying and extreme "systems" used: it needs to be a "coherent, adoptable, and straightforward set of accounting standards in which financial information must be presented by publicly traded companies in an accurate, reliable, relevant, consistent, and timely manner." That is a general but specific enough description of a well-made financial reporting system.

OOC: That would be fine IRL. It won't work in NS when some nations use bits of sticks for currency.

I've already explained why this is a resolution to reduce barriers to free trade and commerce. Just like lots of other free trade resolutions it enforces national standards to make international trade more accessible and free.

Except it doesn't enforce national standards. It lets a committee go off and decide on an international standard which everyone must comply with. And it gives that committee a very poorly defined and broad terms of reference.

Accounting is a fairly universal concept, especially accounting in member states that actually have stock exchanges. And this doesn't enforce a one size fits all policy because of the line "a level at or above the standards set by the IFSB." Naturally, any corporation can continue their own financial reporting standards if they are already acting above par.

A reporting entity either complies with the standard or it doesn't. Aside from explanatory text in notes to financial statements, the entity has either applied the prescribed accounting treatment to a transaction or it hasn't. There is no such thing as "at or above". Using a straightforward RL example, IFRS prohibits amortisation of goodwill and enforces annual impairment reviews. UK GAAP enforces amortisation of goodwill. A RL privately owned entity in the UK, cannot do both. It either applies IFRS or UK GAAP.

Applying this situation to your proposal, the committee will have to decide what the standard for accounting for goodwill is. When they do so, every single reporting entity to which the proposal applies, will have to follow that treatment. It will be impossible for them to be "at or above". They will be either compliant or noncompliant.

Furthermore, any such entity has to apply the same GAAP throughout it's financial statements. It can't pick and choose areas from both to apply to different parts of the accounts. If it did, the financial statements would end up being completely meaningless.

[New Vancouvia]

It literally does not matter that someone uses sticks instead of dollars. Sticks can still be accounted for and be financially reported on.

It does enforce national standards. It sets a reasonable bar and requires nations to be at or above that mark. And then it very importantly requires external auditing.

There is a thing as at or above. You can always provide more detail. For example, if the IFSB requires quarterly statements, then a company could choose to publish monthly.

A company picking and choosing would fail the consistent and/or reliable requirement.

[Bananaistan]

It sets international standards that have to be applied. How is this a national standard?

If the company only does monthly reports, they will be noncompliant. If the standard requires quarterly accounts, they must produce quarterly accounts. It's straightforward. Monthly accounts are not more detail, thery're just doing something other than that which the standard requires. it's black and white.

[Bears Armed]

"Please clarify that these proposed standards will not include setting any one specific mathematical scale (for example, 'base-10') as required for use in all member nations' accounting methods."

Artorrios o SouthWoods,
ChairBear, Bears Armed Mission at the World Assembly.

[Bananaistan]

Please clarify that these proposed standards will not include setting any one specific mathematical scale (e.g. base-10) as required for use in all member nations' accounting methods.

There's nothing in the proposal to say that they won't. In fact the committee could come up with any bizarre eejitry they wanted to. There's no direction in the proposal, we are supposed to just give this committee a blank cheque to do with our accounting standards as they wish.

Edit: Also, it's time to roll out my usual objection based on the forgotten resolution (GAR#68 National Economic Freedoms):

REQUIRES that no commerce be generally restricted by the WA unless:

1. Restricted by prior legislation, or
2. The enterprise causes an extreme hazard to national populations

The proposal at hand would not compliant as there is no extreme hazard here that it seeks to rectify.

[New Vancouvia]

It sets international standards that have to be applied. How is this a national standard?

If the company only does monthly reports, they will be noncompliant. If the standard requires quarterly accounts, they must produce quarterly accounts. It's straightforward. Monthly accounts are not more detail, thery're just doing something other than that which the standard requires. it's black and white.

Disagree with you there. If a company issues monthly reports then most likely they are doing quarterly reports too, and if they're not, then all you have to do is take three months and add.

The proposal at hand would not compliant as there is no extreme hazard here that it seeks to rectify.

A fraudulent international marketplace/exchange is an extreme hazard.

"Please clarify that these proposed standards will not include setting any one specific mathematical scale (for example, 'base-10') as required for use in all member nations' accounting methods."

Artorrios o SouthWoods,
ChairBear, Bears Armed Mission at the World Assembly.

This is just like the currency thing; it doesn't matter which base you use so long as the information is presented in an accurate, reliable, relevant, consistent, and timely manner. Consistency would be the big one here. If a company is continually issuing its statements in binary then it should keep issuing them in binary as opposed to swapping back and forth every year. Also, relevancy. If stakeholders cannot read binary, then they should switch to a more accessible form permanently.

[We Couldnt Agree On A Name]

Perhaps I could refer you to the explanation of the category rules:

These are almost exactly opposed types of resolutions. Both affect Economic freedoms. "Free Trade" increases Economic freedoms while "Social Justice" reduces Economic freedoms. "Social Justice" increases government spending on welfare and targets living standards. Economic freedoms primarily discuss how much regulation there is on business/industry or how much government spending goes to helping poor/sick people. Total Economic freedom is Laissez-faire Capitalism. Zero Economic freedom is a completely government-controlled economy. Creating a Food and Drug Administration in all WA member nations, or creating a Securities and Exchange Commission in all WA member nations is imposing a mild form of Economic control, and therefore a mild reduction of Economic freedoms; you're imposing restrictions on what businesses and industries may do and you're moving away from a completely-uncontrolled Laissez-faire system.

"At the risk of going off topic I'd like to remind the good delegate that Laissez-faire capitalism allows, indeed requires regulation necessary to facilitate a free market, including measures against fraud."

[Ubitarium]

Our civilisation has no money and no accounting. Everything is synthesised by our ridiculous number of ZPMs. What is the need for accounting?

[New Vancouvia]

Our civilisation has no money and no accounting. Everything is synthesised by our ridiculous number of ZPMs. What is the need for accounting?

Then I'm guessing you have no publicly traded corporations either? Congratulations, you have RP'd so well that you are no longer subject to this lowly GA resolution

[Whovian Tardisia]

If the company only does monthly reports, they will be noncompliant. If the standard requires quarterly accounts, they must produce quarterly accounts.

If I understand this correctly, "quarters" fall at the beginning or ending of months. This means that, in nations with 12 month calendars, for example, every 3 months, the previous 3 monthly reports would be compiled and sent to the IFSB as a quarterly report. The rest of the reports would be published domestically, and the company could do it's monthly reports and still comply.