Asia emerging as key player in international standard setting: Tweedie

Asia is emerging as a significant force in international accounting and is baulking at attempts to pressure standard setters, according to the head of the international accounting rule maker.

Sir David Tweedie, chairman of the International Accounting Standards Board (IASB), believes Asian nations will take a tough stance against political interference in accounting standard setting as its influence on accounting rule-making grows.

“You are going to find Asia, who are pretty supportive, don’t like people telling [standard setters] what to do because they say, ‘wait a minute, we are going to use these standards too, so why should tell us what to do - Get your tank of our lawn’.”

The IASB were pressured by parts of Europe to change its fair value standard in the wake of the crisis. The fair value principle ravaged banks balance sheets as asset prices plummeted in falling markets. Banks were forced to measure their loan-books at depressed market prices which obliterated much of their balance-sheet value.

In October 2008, under pressure from Europe, the IASB carved out parts of its fair value standard. It is in the process of replacing its standard in a three-phased project, due to be completed by June 2011.

Europe were the first bloc to adopt international standard in 2005. Since then India, Japan, Korea and other Asian nations have set in train processes to eventually adopt the international rules.

“We owe a lot to Europe. They set us going. They made the big decision. It took us by surprise suddenly 25 countries are using IFRS,” Tweedie said.

“When [accounting standards] are truly international, with Asia next year, Korea, India, Japan, they are all building up, Europe will not be the big power.”

For full details of Sir David’s interview, see Accountancy Age's 9 September issue.

Further reading:

Tweedie: US fair value not proving popular

Tweedie warns US to adopt standards or lose influence