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Crunch time for international standards

10 Jun 09

The accountancy profession's international standards setter is under pressure from national interests

It appears that the International Accounting Standards Board (IASB) lives to fight another day. Led by ICAS member, Sir David Tweedie, the international standard setter was summoned to a meeting of European finance ministers to explain the body’s progress on rule changes relating to financial instruments.

The IASB has come under heavy political pressure to act more quickly in relation to the financial crisis. The body’s approach, quite rightly, has been to concentrate on getting the rules right, rather than rush through a quick fix to satisfy the politicians. Sir David made that clear at yesterday’s meeting and endeavoured to better inform EU governments of the body’s response to the crisis.

Many amongst the profession are concerned about political interference in standard setting. I think that this is an unrealistic position. At the end of the day, ministers represent nations and must have a say in how international bodies conduct themselves. Their part of the bargain, and I realise that this is very difficult for individuals who strive to be re-elected, must be to recognise the issues that the IASB wrestle with in a non-national context.

For Sir David, the battle is over but the war is far from won. International standards look to be threatened by national interests for some time to come.

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Ian Jenkins

Wednesday June 17, 2009, 17:04

National interests? They vary hugely - sometimes in defiance of international agreements. Accounting is only one aspect.

A particularly alarming example is countries with big energy resources whose governments are refusing outsiders permission to explore and extract energy. And in the absence of effective enforcement of international rules, these countries are attempting to safeguard their assets with nuclear weapons - hence the proliferation that the Director of the IAEA complains of bitterly today.

Here is a paper from Dundee University to the Energy Charter Conference last month. Some of the legal aspects are covered. http://www.encharter.org/fileadmin/user_upload/Conferences/2009_May/1_-_Cameron.pdf

david kinnon

Tuesday June 23, 2009, 08:19

For Sir David Tweedie the battle is perhaps only beginning. There is a clear need for standard setters to engage in real world scenarios rather than living in an inexperienced and simplistic academic bubble. They have not grasped the issues on accounting for financial instruments.

Ian Jenkins

Wednesday July 15, 2009, 20:47

The pressure to observe local political interests can be overpowering.

A point that was illustrated by a speaker at the London School of Economics a couple of weeks ago. The famed editor of Newsweek International, Fareed Zakaria, told us [podcast] that nations can't be trusted to deal with global problems - economic, societal, disease.

With bird flu, for example, the world was unlucky because some of the countries that were affected hoarded information in order to keep tourists coming and spending money on the national economy. With swine flu, on the other hand, the world was fortunate: the main source Mexico shut down its economy for two weeks. The Mexican health minister just happened to be a very smart and honourable man and did the 'right' thing [for the global community]. However it clearly harmed the Mexican economy - was this treasonous?

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