mr ferguson reviews the progress on year 2000 readiness and focuses on public disclosure and public confidence in the united states remarks by mr roger w ferguson, jr, a member of the board of governors of the us federal reserve system and chairman of the joint year 2000 council, before the george washington university y2k group in washington, d. c. on 29 july 1999. * * * as the countdown to the year 2000 continues, and with only five months to go until the new year, it is certainly prudent for us to focus now on the year 2000 readiness of our nation and, indeed, the entire global community. so i applaud the research program in social and organizational learning here at george washington university for sponsoring this wide - ranging conference. over the course of several days, this assembly has discussed important issues in many sectors of our economy. these year 2000 discussions, and others like them around the nation, will help to create public awareness and understanding, which are very important building blocks in the structure of public confidence. i will come back to the confidence issue in a few minutes, but i will commence with a review of progress to date. preparedness of the domestic banking industry first i want to provide today some perspectives on the year 2000 readiness of the us banking sector. at the federal reserve we are closely involved with preparations for the century date change in the financial sector here and around the world. we expect there will be glitches. nothing this complex can be completely without fault. however, i want to confirm at the outset that the federal reserve is ready for the year 2000, and every current indication is that the domestic banking system is, for all practical purposes, also ready for a smooth transition. much of my emerging confidence results from the fact that the federal reserve system is fully prepared for the year 2000 ; 100 % of the federal reserve ’ s mission - critical systems are ready. at the federal reserve board and the 12 district banks, we are using today the automated systems that we will use in the year 2000. in fact, we have been testing these systems for more than a year with banks and thrifts that are linked to us around the country for payments and related functions. these tests have gone extremely well. this is significant because the federal reserve banks operate the hub of the nation ’ s payments system, providing depository institutions with essential services in cash, checks, and electronic payments. thus, because of the federal reserve ’ s readiness, americans can have confidence that

and ensure public and investor confidence in entities. thus, along with high levels of technical competence, accounting professionals also need to have unquestionable and impeccable professional integrity. therefore, professional bodies have codes of ethics for their members and disciplinary procedures for those who infringe upon these rules. however, one of the causes of the recent financial crisis was also the poor adherence to ethics by some accounting professionals who exploited “ form over substance ”, rather than “ substance over form ” to hide weaknesses in their financial position and misstate profits. thirdly, adaptability and compatibility of existing it solutions used by banks to the new requirements imposed by ifrs convergence is also a major challenge. software which has been written keeping in mind indian gaap requirements may have to be modified substantially to incorporate features of ifrs requirements. similarly, compatibility between software and hardware would have to be addressed to take care of the new requirement. rbi has always believed in the fact that accounting standards and the integrity of its implementation has a very important role to play in the financial system as reflected in the report of the committee on financial sector assessment, wherein the importance of the convergence process of indian accounting standards with ifrss has been emphasized. rbi has set up a working group to address implementation issues in ifrs for non - disruptive migration of the indian banking system with members from icai, iba and the regulatory and supervisory departments of rbi. conclusion training, education and skill development is one of the cornerstones of a successful ifrs implementation. all the stakeholders including investors, accountants, auditors, customers, software and hardware vendors, rating agencies, analysts, audit committees, actuaries, valuation experts and other specialists would need to develop and understanding of ifrs provisions to varying degrees and what they need to do. educational institutions need to play a pro - active role and students must also strive to develop a strong conceptual understanding of the new framework and academic institutions should include it in their curriculum. it is not only the accounting issues but how we address the non - accounting issues that will determine how successfully we make a transition to ifrs. it is in this backdrop, and considering the ongoing changes in the standards both globally and in the indian context as well as the amount of work involved in the convergence process, that this national seminar on ifrs assumes importance. i wish the deliberations in this seminar all success. bis central bankers ’ speeches