INTERNATIONAL STANDARD SETTERS the IASB have delivered an optimistic annual report 2010, predicting a return to budgetary balance in 2011 and the completion of outstanding convergence projects before the year is out.

Departing chairman Sir David Tweedie used his swansong to recall the early years of the body, when it had "a tiny office with only a few rooms and a dozen or so staff".

He said the remaining convergence projects are some of the knottiest, with financial instruments, hedge accounting and fair value measurements still causing head scratching for global and US standard setters.

Despite the value of IASB assets slipping £2m year-on-year, the board seemed little perturbed by finances. It enjoyed a slight increase in contributions, from £16.59m in 2009 to £16.64m in 2010, while publications and related revenues plumped the coffers to the tune of £100k.

Interest revenues fell by £106,000 to £271,000, while expenses rose 5% to £24.1m. Nevertheless, the board was confident that despite the economic downturn and climbing costs, the foundation's budget will be back on track by the end of 2011.

Next year's healthier bank balance is expected to come from higher funding through new financing regimes; essentially, this means more generous contributions from members, plus licensing income from countries and professional organisations seeking electronic access to IFRS.

After the financial crisis, IASB focus swung onto related projects like derecognition, with other work sidelined until the completion of these high priority tasks. Income tax and intangible assets were among those that fell victim to "reassessment as a lower priority". This means the IASB can safely wait until its key tasks are completed and the convergence decision is taken before revisiting more minor responsibilities.

Perhaps this is reason behind the board's sunny mood? With just three - admittedly testing - standards to complete in the coming months, the IASB at least has a defined task at hand, even if it is an arduous one.

Recent rumbles from US regulator the SEC have been positive, with one of the five top dogs, commissioner Kathleen Casey, urging stakeholders to stop "kicking the can down the road" and saying the body "must decide to incorporate IFRS for US issuers".

So with one final task to complete, and all signs pointing to positive, the IASB might be looking forward to putting its feet up post convergence. With a little luck, the glare of global interest will subside and its most arduous task will be to tweak existing standards and write uncontroversial new rules - a far cry from the sweat and blood of the last ten years.

LAST WEEK, the Federation of European Accountants summoned the great and the good to put their heads together on some of the industry's knottiest issues.

Keynote speakers included the dread commissioner Barnier (pictured) and James Doty, chairman of US regulator the PCAOB. Our very own Stephen Haddrill, head of the Financial Reporting Council, also held forth, and topics for discussion included the role of audit and building a European market.

So what did these giants of accountancy have to say? Starting with Barnier - as the firms are straining for any indicator of his plans - observers won't be surprised to hear him trotting out his "status quo is not an option" line once again; reading between the none-too-subtle lines, the commissioner means business.

Again, he went straight for mandatory rotation, saying it is essential to find a balance between "excessive rotation that would damage audit quality" and auditor independence.

Perhaps more worrying for the Big Four, but welcomed by smaller peers, was his pronouncement on non-audit services; Barnier said they should be limited at the very least "or perhaps outlawed", adding: "I wonder whether it might be necessary to go as far as proposing 'pure audit firms'."

Moving on to Doty before the firms start perspiring too hard; his three hot topics were the relevance and value of audit; auditor-client relationships; and the role of audit participants such as regulators.

Compared to Barnier's trio of obsessions - auditor independence; reducing concentration; and boosting integration and supervision Europe-wide -auditors might wish they lived on the other side of the pond.

However, Doty wasn't too soft of the industry, saying countries desperately need a more relevant and reliable financial information about risks, and for regulatory loopholes to be zipped up tight.

He touched upon the PCAOB's recent proposals for the auditor's reporting model, and waxed lyrical about the importance of cooperation between national regulators.

Haddrill's speech is not available, but if the others are anything to go by, he will have trotted out some well-worn themes. All in all, perhaps little new from the big names, but a good chance for industry heavyweights to get together and further the debate on audit.

IS IT ME, or are there signs of change at the top of the audit market? As someone who regularly scans the papers for chopping and changing among the Big Four and their largest competitors, it is relatively rare to see one of the top dogs losing an audit to a peer.

So this morning when I saw Aviva had ditched Ernst & Young for PwC, I counted myself lucky, in the way I imagine a bird enthusiast would do on seeing a flash of unusual plumage in a local park. Imagine my excitement (if possible) at later finding both PwC and Deloitte had lost and won major clients, all in the same day.

Although E&Y shed high profile company Aviva, they managed to wheedle Aegis Group away from Deloitte, which had been the brand management specialist's auditor since 2004. Deloitte may not have been too cut up, as it nabbed Canadian Pacific's audit from PwC, while PwC could comfort itself with the star prize of insurance giant Aviva's audit.

True, these changes still keep high profile audits firmly within the Big Four family, but they may be significant nonetheless. Since the financial crisis turned the spotlight on auditors, investors and shareholders have been uncomfortable with the evidence of auditor-client relations stretching back decades, and audit committees have felt themselves under pressure to justify tendering decisions.

It is hard to say what impact this has had. In some cases, the audit may have been put out to tender, potentially resulting in no change, but at least reminding management that there are other firms in the sea. It could be that such speculative tenders led to surprise bargains from rivals eager to steal a march on one another, pushing companies to switch auditor even if they hadn't planned to. And in some cases, management may have felt under pressure to make a clean break from the perceived lack of independent audit, actively seeking an alternative to a long-standing audit provider.

It will be interesting to see whether such chopping and changing is well received further down the audit market. Grant Thornton and BDO didn't get a look in, it's true, but mid-tier firms must nevertheless be pleased to see dusty old ties being broken and a new measure of dynamism entering the market. With no changes it would be impossible for non-Big Four firms to win larger tenders; perhaps these small shake-ups will reverberate, creating enough momentum to propel firms into the stratosphere of FTSE-listed clientele.

THE INTERNATIONAL Accounting Standards Board has been busy lately, publishing six updates in the last week, of which the highlight was an updated standard on post-work benefits.

IAS 19 was relatively well received by Big Four commentators, who said it will boost transparency and comparability in pension plans, but could have significant associated costs for companies when the standard comes into force on 1 January 2013.

The global standard setter also released a communiqué following the 5th International Financial Reporting Standards policy forum for the Asia-Oceania region, and met with the European Financial Reporting Advisory Group to review the IASB's current work programme.

Along with the US Financial Accounting Standards Board, the body is re-exposing revenue recognition proposals, on the basis that "it was appropriate to go beyond established due process given the importance of the revenue number to all companies and the need to take all possible steps to avoid unintended consequences".

The two standard setters also issued amendments to bring the presentation of items of other comprehensive income in line; the new rules require companies to group together items within OCI that may be reclassified to the profit or loss section of the income statement.

Next up on the IASB's to-do list, a consultation on its future agenda. Quarter three will see a request for views on strategic direction and overall balance, available on the board's website.

CRITICS OF International Financial Reporting Standards have expressed dismay at the government's dismissal of concerns over IFRS aired by the House of Lords.

A key finding of the report Auditors: Market concentration and their role was that IFRS limited the ability to exercise prudent accounting. The government said it "does not accept that IFRS has led to a loss of prudence", saying "the concept of prudence continues to permeate accounting standards".

Activist investor Tim Bush said: "Vince Cable does not seem in command of his subject. Prudence means not overstating assets so as not to overstate capital and profits. If he has not gathered that overstating banks' dodgy assets in their accounts was the cause of the crisis, no wonder his banking initiatives have failed to show much clarity or direction."

Brother in arms Gordon Kerr of Cobden Partners had similarly damning things to say about those who do not heed their IFRS warnings. Kerr recently advised Steve Baker MP on a private member's bill, which posited that a lack of prudence meant banks should be forced to file accounts in both IFRS and UK GAAP.

Kerr recalled George Orwell's famous quote to explain IFRS doubters' position: "In a time of universal deceit - telling the truth is a revolutionary act," saying: "The banking system is moving steadily into another chaotic crash, the scale, speed and effect of which is substantially attributable to the flawed IFRS accounting."

The grandiose statement indicates the depth of feeling on both sides; IFRS critics are convinced it is only a matter of time before they are proved right in spectacular fashion, while opponents say they are irrationally partisan and obsessed with an imagined golden age of accounting standards.

DELOITTE were the first stakeholders to air their views after the government published its response to the House of Lords audit inquiry.

The Big Four firm didn't have a great deal to say, highlighting the fact that it is maintaining efforts to "contribute positively to the various reviews that are in progress to promote further audit quality".

It responded to concerns over the loss of one of the top four firms, saying contingency planning was "key".

Grant Thornton's reply was similarly minimalist, saying the most important outcome of the Lord's report remains the Office of Fair Trading investigation.

Head of external professional affairs Steve Maslin said it is key that efforts at monitoring the relationship between bank auditors and regulators are continuing, and a swing back towards good levels of dialogue has already begun.

Watch this space for more reacitons to the government's "disappointing" response.

LAST NIGHT saw an accountancy event to unite the great and the good, hosted by ICAS at Stationers' Hall.

The annual Aileen Beattie Memorial Lecture was given by Philip Johnson, president of the Federation of European Accountants, and entitled 'The accountancy profession: reinvent or face extinction'.

Fighting words indeed, and the speaker promised to ruffle a few feathers by the end of his one-hour speech.

He ran through the current hot list of ways to shake up the industry: joint audit; mandatory rotation; integrated reporting. One academic accused him of bringing old ideas to the table, but as a Big Four partner later commented, if even two-thirds of the proposals were implemented, the repercussions would be huge.

Johnson placed the burden of change at the feet of firms and institutes, warning legislation could be foisted upon them if solutions are not proactively offered. This, he claimed, would be well received by legislators lacking expertise in the field.

The alternative, faced with a fragmented industry and 27 member states to consider, would be intervention by authorities who are fed up with waiting for business-led change.

He accused audit of failing to keep up with the globalisation of business, saying firms are scrabbling to deliver in an increasingly supranational world.

Johnson pushed for more integrated reporting and assurance for the front half of financial reports, saying investors pay greater attention to investor reports and KPI indicators than the annual offerings of auditors.

But he ended on a positive note, saying reinvention - not extinction - was surely the future of the industry. Close questioning followed on the shape of assurance reports and the implications of a higher audit threshold, among other things.

Deloitte's audit king Martyn Jones laid into Johnson with vigour, after proudly flagging up his recent appointment as vice-president of the ICAEW. He delivered a fiendishly long question in a faux-humble manner, suggesting "the point may have been covered while I was not concentrating". Half answering the query himself, he gave the impression of being little impressed with the speaker's words.

But the evening didn't end on this uncomfortable note, as cocktails and conversation awaited attendees after the question and answer session. All in all, a successful event that keenly piqued the interest of stakeholders struggling to adapt in an industry with an uncertain future.

A SPAT has blown up between the ICAEW and ex-council member Alan Livesey over rules fudging at the recent elections.

Council composition has shifted to reflect the institute's growing international membership, resulting in the number of reps from UK constituencies being slashed, with Scotland - formerly represented by Alan Livesey - losing one of its two council members.

Carl Bayley has been left to hold the Caledonian fort, and Livesey professed himself happy to make way for overseas members, although his subsequent complaints hint at the bitterness of the pill he's swallowed down.

Technical errors meant the required period between voting and Tuesday's AGM - constitutionally set at 14 days - was breached, forcing an emergency suspension of election rules.

This was approved by the majority of council members. Livesey argued they would not have been so accommodating if the breach had undermined potential candidates' chances, saying: "There appears to be one set of rules for the masses and another, seemingly unchangeable set of rules for the institute."

The institute held up its hands, blaming a delayed start to the multi-step election process, exacerbated by the long weekends in April. A spokesman said the "purely technical error did not affect the results", insisting the voting remained free and fair.

Other complaints from Livesey focused on the nomination process and its impracticality for geographically diverse regions like Scotland. He gave a nod to overseas compatriots, saying the US and Australia would surely run into similar problems, but the tone of his complaint rang with the bitterness of a long-serving council member being forced to stand down.

The ICAEW may wish to take lessons from its globally-focused neighbour ACCA, the most international of the UK institutes. Head of policy Ian Welch said just under half of council members come from outside the UK, and their bi-annual meetings are frequently held abroad - most recently in Poland.