The collapse of major US banks contributed to the International Accounting Standards Board’s funding woes forcing the body to dip into its reserves, a meeting of international market supervisors has heard.
Gerrit Zalm, chairman of the trustees of the IASB, said the collapse of Lehman Brothers and Bear Stearns had added to the organisation's funding difficulties. Zalm told a meeting of the monitoring board, a global accounting oversight body comprised of market supervisors, last Thursday that existing funding from the US had now fallen short of expectations.
The IASB receives voluntary contributions from US companies, which contributed £2.4m to during 2008, making it by far the highest national donor. Banks and other corporations, which use or favour international standards, make up the bulk of contributors.
Zalm said the collapse of US banks had contributed to a funding shortfall which needed to be addressed if the IASB intended to expand.
“In the US we still have to go with the hat in hand and collect. That procedure is becoming more difficult,” he said.
Mary Schapiro, chairman of the US Securities and Exchange Commission (SEC), also at the meeting, said she intended to put in place a “longer term solution”.
“The trustees and the monitoring board all know that we are very committed to finding a solution to the US funding issue and we are working very hard in the short term to find a lasting approach to this,” she said.
US corporations are scaling back their contributions to the IASB as the US shows increasingly favourable signs of adopting international standards. They fear that once the US formally commits to international standards, it will bring in its own compulsory levy, which will replace the voluntary contribution.
The US has yet to decide whether it will replace its existing accounting rules for international standards. In January, Schapiro said she supported high quality international accounting rules but would not make a final decision on US adoption until at least 2011.
Zalm said he would also hold talks with Europe to discuss its contribution. European nations, including the UK, contributed about £5m to the IASB during 2008, with the largest share coming from Germany which contributed £1.3m. Plans are now underway to funnel national contributions through the EU which will reduce Europe's overall contribution to €4m (£3.5m).
EU commissioner for internal markets Michel Barnier, who was also at the meeting, said while “the first priority is to ensure stable funding” he would not commit to an increase in funding.
“(Funding) is not automatic and must be approved every year,” he said.
“It would be premature at this stage to recommend an increase in our monetary contribution.”
Hm, does anyone else find it worrying that the IASB relies on funds from the people it is supposed to be regulating?
Posted by: Mike Page, 07 Apr 2010 | 00:00
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