The ICAEW has launched a stinging attack on the International Accounting Standards Board over its proposed changes to accounting for takeovers.

In a blunt response to the board's consultation on its Business Combinations 2 project, part of the IASB's and the US Financial Accounting Standards Board's joint plans for standards convergence, the institute not only criticised many of the proposals put forward, but also the processes used to in arriving at them. It argued that the IASB had not followed 'an acceptable development process for proposed changes of such significance'.

'The IASB has put forward some far-reaching proposals without presenting any evidence of shortcomings in what we do now,' said Andy Simmonds, chairman of the ICAEW's financial reporting committee. 'In our view, current practice has no great conceptual flaws and works well for preparers and users. We are certainly not aware of any calls from users for radical changes.'

In particular, the ICAEW was critical of the IASB's intention to move away from the 'parent' model for consolidated financial statements, to an 'entity' model. This, it said 'will have the effect of disguising the financial position of the majority – the equity shareholders in the parent to whom the financial statements are primarily addressed'.

Last week internal market commissioner Charlie McCreevy warned that IASB that 'convergence is not an invitation to standard setters to try and advance the theoretical frontiers of accounting'.

'I will not take on board any revolutionary new standards,' added McCreevy. 'This should be a practical exercise, firmly anchored in business reality, to be undertaken in the interests of users and investors.'