As the storm clouds of recession gather, the role of government and regulators in keeping the economy from toppling off a cliff comes under immense scrutiny.

Pre-Enron, the role of accounting standard setters seemed almost irrelevant to the performance and health of the real economy. City analysts were more interested in cashflows. Strong cashflows equated to good profits and high valuations. Apart from the cashflow statement, the rest of the financial statements seemed an irrelevance to many shareholders in the quoted sector of the economy.

But the cashflow statement was a late arrival in company financials compared with the balance sheet and the profit and loss account.

A cashflow standard was issued in the early 1990s, replacing the unlamented, unmissed and frankly baffling, funds flow statement. But the relevance of accounting standards now stretches far beyond ensuring accurate reporting of company cashflows.

As accounting standards attempted to respond to an increasingly complex economy, disputes with those who saw the attention of standard setters as unhelpful were inevitable. One of the key objectives of financial reporting ­ as stated in numerous attempts to work out a conceptual framework for accounting standard setting ­ is to provide information that is useful in making business and economic decisions.

The words come from the US standard setter FASB, but are echoed by other boards. Behind that motherhood and apple pie statement lie a whole host of other questions. For whom is the information intended? What type of ‘business and economic decisions’ do they make? What information do they need to enable them to make those decisions?

The FASB statement goes on to to say that ‘financial reporting should provide information to help investors, creditors and others assess the amounts, timing and uncertainty of p rospective net cash inflows to the related enterprise’.

The history of standard setting over the past two decades has been a fight to provide that information and for relevance. Standard setters have seen a complete lack of rules covering key economic activities (financial instruments is the classic example); rules that were irrelevant (pension accounting springs to mind); or were so loose that any self-respecting management (along with their advisers) would be mad not to drive a coach and horses through them. The rules on business combinations fit that bill with ‘big bath provisions’ where even the most value-destroying deal could be cloaked in some accountability of respectability, at least for the first couple of reporting seasons.

Standard setters have often battled on in the face of criticism. In 2002, then work and pensions secretary Alistair Darling, attacked FRS 17 Retirement Benefits, suggesting it was out of line with international practice and damaging the defined benefit pension industry.

Present pension accounting may have critics, but few now argue that a standard attempting to measure the true cost of a pension arrangement for shareholders is worse that a standard that obfuscates, leaving future shareholders, managers and employees to pick up the very expensive pieces.

Of course we should not pretend that accounting is neutral. By measuring the numbers in a certain way it determines behaviour, which is why people seek to change the accounting. By forcing the savage impairment of financial instruments in the credit crunch many reckoned the standard setters were being over-hasty and valuing great swathes of banks’ balances sheets at way below realistic levels.

Suddenly accounting rules could stop being a technical argument between clever accountants and start having a real impact. The IASB may be sticking to its fair value guns but significantly it is prepared to engage with the financial services industry to see if it can refine or redefine the valuation models.

While standard setters stand accused of stoking the flames of the crisis by their rules, could they also be accused of making this economic and financial crisis worse by inaction? The UK’s Urgent Issues Task Force (part of the ASB) has been looking at the legal definition of off balance sheet following confusion prompted by the Companies Act 2006.

One major factor in pushing credit was the rise of special purpose vehicles that allowed banks to keep certain things off their balance sheets. Much is now back on, but if the accounting rules had ensured they had never left the balance sheet in the first place, maybe the credit crunch tale would have been different.

If investors change their behaviour during an economic downturn should standard setters? The IASB has made a great play about how it is responding to the credit crisis by joining with other regulators in keeping financial systems and markets working. Should standard setters change their agenda by working with other regulators and companies to help restore confidence in markets?

One of the big battles left to fight in the standard setting world is leasing. Is now the right time to drive billions of dollars of aircraft, rolling stock and other fixed assets back on to corporate balance sheets?

Standard setters don’t determine whether economies prosper or fall into recession.

They help to sort out the rules that determine the score. But when livelihoods and fortunes are at stake, it is perhaps not surprising that accounting standard setters become another victim of messenger shooting.