McCreevy's European omission

EU commissioner Charlie McCreevy

The chasm which separates the International Accounting Standards Board and Europe has been exposed after EU commissioner Charlie McCreevy refused to sign documents which enshrine the values of international standard setting and underpins a key oversight body.

The absent signature has led to a stand off between the IASB and the European Commission.

McCreevy’s signature is noticeably missing from both the charter and the memorandum of understanding which set out the principles of international standard setting and underpin an oversight body, known as the monitoring board.

The monitoring board was set up in April to promote the continued development of high quality accounting rules by the IASB and provide oversight on the global standards-setting regime.

McCreevy has been relegated to the role of an ‘observer’ on the board until he signs the two documents. A spokeswoman from the board said McCreevy indicated he will ‘be able to sign the charter and the MOU’ at the board’s 6 July meeting – but McCreevy’s office has offered no such assurance.

A spokesman told Accountancy Age there remained ‘reservations’ about the IASB among the EU’s 27 member states and their finance ministers, which has prevented McCreevy signing the document.

‘Seeing the reservations, particularly on the side of the European Parliament, the commissioner intends to meet with the newly-elected parliament to discuss further progress in autumn,’ he said.

The monitoring board is comprised of prominent regulators including the US Securities and Exchange Commission and the Japanese Financial Services Authority.

It is understood that McCreevy’s reluctance to sign the document is due to ongoing European criticism of the IASB, primarily from the French and German camps which believe there is an anglocentric thread running through the IASB’s decisions and attitude.

The pair previously attacked the IASB’s revision of IAS 39 – criticised for exaggerating the effects of the international financial crisis – last month, making their concerns to McCreevy in a joint letter.

At the last meeting of European finance ministers German minister Peer Steinbrück said the IASB should release its review of financial instruments ‘not at the end of the year, but in the autumn’.

Finance ministers at the meeting instead reaffirmed their previously held timetable holding the IASB to its promise to release revised standards in time for 2009 accounts.

Dangling above the IASB is the possibility that Europe abandons the international standard setting system in favour of a European standard setter - a move which could sound the death knell for global standards.

Deloitte’s senior technical partner Ken Wild said the international regime would not survive without Europe on board. ‘It would be the end of international accounting standards – the world would fall apart,’ he said. ‘There is no point in having international accounting standards without Europe.’

Last October Europe threatened to amend its accounting rules independently of the IASB – a move later described by IASB chairman Sir David Tweedie as ‘a blunt threat to blow the organisation away’.