24 hours to save accountancy

We have entered a critical stage for the future of accountancy.
Today the House of Representatives will vote on the latest version of the $700bn Paulson rescue plan. In it will be a provision reaffirming the US financial watchdog’s right to suspend mark to market accounting. If the bill goes through we do not know how that provision will be used.
Tomorrow French president Nicholas Sarkozy will host a summit to be attended by Gordon Brown, alongside the leaders of Germany and Italy, to figure out a way to save Europe from the credit crisis. On the agenda – a giant bail out for European banks plus a proposal to suspend mark to market accounting.
Both events have placed accountancy and standard setters at the heart of the global financial crisis and stand to change the face of accountancy as we know it. They would also reverse the work of the past 25 years, as one highly placed Big Four partner put it to Accountancy Age. Suspension could risk the global accountancy project, threaten the comparability of accounts and confuse investors even further.
Regulators and investors are drawn up on the side of market to market while bankers and executives have condemned it.
The next 24 hours could prove critical for investors, bankers, auditors, accountants and standard setters alike. It looks very much like the politicians are getting together to make accounting history. The weekend will be fascinating and frightening.
I’ve already said where I stand. Fair value may be flawed, but everything else is no better and a change would only make the landscape more confusing for investors. The midst of a crisis is no time to make these kinds of rules. The politicians – as one FTSE100 chairman told a colleague – must resist being seen to do something for the sake of doing something.
Today the Association of British Insurers called for the politicians to resist saying now was not the time to tinker with fair value. I can only concur.