Bush and G20 leaders asked to support IASB independence

The head of the body overseeing the work of the International Accounting Standards Board has taken the extraordinary step of writing to President Bush urging international leaders at the G20 meeting in Washington to support the independence of the IASB and leave it to get on with its work.

Gerrit Zalm, chairman of the IASB’s trustees, reiterated all the work the board is doing as part of efforts to resolve the credit crisis ahead but said: ‘The success so far achieved should not be compromised by actions that would weaken the independence of the standard setting process.’

The letter comes ahead of the meeting on Saturday which has accounting and standard setting firmly on its agenda.

Nicholas Sarkozy will go to the meeting with a statement signed by EU heads of state saying accounting standard setters will need to be ‘reformed’ to allow closer cooperation with institutions guarding financial stability. The proposal is seen as a move that could lead to demands for stability to be written into the remit of the IASB, a measure viewed as conflicting with its central role of promoting transparency and comparability.

In the G20 letter, Zalm attempts to head off that prospect by stating that the IASB has already begun a dialogue with the Basel Committee on banking regulation.

However, Zalm adds: ‘At the same time the primary aim of accounting standard-setters (and securities regulators) is to provide transparency and comparability of financial information for investors and participants in capital markets – an objective that should not be sacrificed.’

Zalm also addresses efforts behind the scenes in Brussels to circumvent the IASB and drop requirements for fair value accounting, much criticised by politcians and corporate leaders in the US.

‘The trustees believe that any steps taken outside the well-established and supported stand-setting process to amend fair value accounting would further undermine already scarce confidence in financial markets. Therefore efforts to improve financial reporting should be led and completed expeditiously by the IASB in order to ensure globally coordinated approach,’ Zalm writes.

Zalm asks President Bush to circulate his letter to the G20 leaders