'Hands off the IASB,' say institutes

The ICAEW and CIMA have come to the defence of the International Accounting Standards Board (IASB), whose independence is under threat from Germany and France.

The countries are pressuring the organisation to speed up its review of accounting rules in the wake of the global financial meltdown.

German finance minister Peer Steinbrück last week suggested that the IASB push forward its review of contentious fair value and impairment rules to September.

‘We must encourage the IASB to make the proposals not at the end of the year, but in the autumn,’ Steinbrück told Reuters news agency.

The IASB has consistently said its review will be completed by the end of the year.

A meeting of European finance ministers on 7 July reaffirmed this timetable. In the same week, Steinbrück and French economic affairs minister Christine Lagarde said they penned a letter to EU Commissioner Charlie McCreevy outlining their concerns.

But two accounting bodies have hit back, warning against the politicisation of standard setting.

The institutes, with a combined membership of more than 300,000, said the IASB should be left alone to complete its review of standards, especially controversial IAS 39. The standard governs how large companies recognise and measure financial assets.

The rule was criticised for exaggerating the effects of the global crisis causing asset values to plummet in depressed markets.

Yesterday, the IASB released a consultation paper, known as an exposure draft, which outlines its proposals to amend IAS 39 in the wake of the global crisis.

CIMA’s director of technical development, Richard Mallett, said the IASB must remain independent and be allowed the time to produce high quality accounting rules.

‘It’s critical that the IASB remains an independent standard setter and is given sufficient time to produce a sensible output with time for due process,’ he said.

ICAEW financial reporting head Nigel Sleigh-Johnson said the revised IAS 39 could have ‘unforeseen consequences’ if the IASB were not left alone to complete its work.

‘The sort of pressure the IASB has been put under is a real cause of concern. It puts it in a very difficult position and it is trying to rise to the challenge but there is only a certain amount it can achieve,’ he said.

‘If, in the end, the IASB proposals don’t go down well with the users
of accounts it will have to look at them again.’

The UK government declined to comment on the German or French concerns.

Instead, a Department for Business, Innovation and Skills spokeswoman said that it was vital for the IASB to finish its review by the end of the year.

‘The IASB has publicly stated its intention to complete this work in time for year end 2009 accounts and UK government believes that meeting this deadline is vital,’ she said.

The IASB declined to comment.