* Bankruptcies seen in car parts industry, construction
* Global economy seen stabilising
* Fair value accounting to remain in place
* Switch to single accounting standard to take 3-5 years
By Gleb Bryanski
MOSCOW, July 13 (Reuters) - The global economy will see more bankruptcies but not on the scale of U.S. carmaker General Motors Corp, a senior executive from accounting firm Grant Thornton International said on Monday.
GM, which last week emerged from bankruptcy proceeding and is now more than 60 percent owned by the U.S. Treasury, has pledged to win back American consumers and pay back taxpayers.
"There is a chain effect that is taking place. We have seen the large bankruptcies, now we are going to see that cascading," Mike Starr, Chief Operating Officer of Grant Thornton, one of the top six global accounting firms, told Reuters.
"We are seeing that in the United States, subsequent to GM's bankruptcy, their suppliers are now filing for bankruptcy," Starr said. He said the construction sector as well as oil and gas service sectors will also be affected.
"That (little number of bankruptcies in the construction sector) has been somewhat surprising and that could still be to come. The housing market in the U.S. has not completely recovered," Starr said.
Starr said he believed the economy has stabilised but there were no signs of an upward movement while firms remained cautious. He said access to credit remained an issue despite the governments' fiscal stimulus packages.
"What we do not know is the long term implications (of stimulus packages). We simply do not have the experience. No-one ever lived through anything like this," said Starr.
FAIR VALUE
Starr said there was a consensus among auditors and regulators that the "fair value" accounting which had often been blamed for contributing to the current crisis will stay but will require some changes.
"In the past eight months there has been a lot of debate. The debate has started to subside, the fair value is still intact," said Starr, who was in Moscow attending a session of the Regulatory Working Group, set up by the leading global auditors, which he chairs.
"The fair value accounting standard has and will remain in place, modified a little bit," he added.
"What we need is a greater transparency. Fair value is an example of transparency. Absent fair value accounting principles, companies will be able to hide, even unknowingly hide, losses that they have incurred," he said.
Fair value or mark-to-market accounting requires firms to value their assets at current market prices, which creates problems when a market is illiquid or inflates the assets' value in an asset bubble environment.
"The disclosure surrounding fair value can be improved," Starr said, suggesting that that discounted cash flow models can be used to determine the asset's "fair value" when a market is illiquid.
Starr said it will take at least three to five years to create a single global accounting standard to replace the U.S.' Generally Accepted Accounting Principles (GAAP) and International Accounting Standards (IAS).
"And that's optimistic," said Starr, urging the United States' Securities and Exchange Commission (SEC) to come up with a timetable for such move. The IAS provides more room for judgement while GAAP is more rules-based. (Editing by Jon Loades-Carter)