ICAEW & Mazars' conflicts of interest with IFRS review indicative of relationship between profession and regulators
THE ICAEW AND MAZARS can feel hard done by having their contract to review the cost and application of IFRS within the EU terminated by the European Commission.
That is not to say that claims they would have conflicts of interest in the report’s outcome are without foundation.
The fact that Francoise Flores, chairwoman of EFRAG – the body responsible for ensuring IFRS are endorsed in the EU – is a former partner at Mazars, and the ICAEW’s main IFRS taskforce is made up of members of the IASB, clearly raises questions.
However, it is worth remembering they won the project during an open, transparent and competitive tendering exercise. Any potential conflicts should have been weeded out during the process.
Some of the points raised by opponents of the contract require further scrutiny. Chiefly that the ICAEW would be biased because its starting point is that IFRS are a “good thing ” given statements to that effect at the end of 2012.
It is hard to believe that any group of technical accountants who spend their careers dealing with the application of IFRS would have failed to form an opinion. And, other than accounting specialists, there remain few other options of who could do the work. As with the recent legal opinions on the legality of IFRS, such reviews are framed within very specific parameters, and may not be suitable for the kind of review the EC had in mind.
It also raises questions of the closeness of the profession to policymaking. Tax partners advise the government on tax law, which some politicians have claimed they then use to help circumvent the rules they helped create. And many have criticised the preponderance of former Big Four partners that now serve as FTSE 100 finance directors, audit committee chairs, and influential positions within regulators tasked with policing the profession.
Given their experience and knowledge, these members of the profession remain the best placed to advise government and regulators. Until other choices are promoted, the issues raised by the EC contract will remain.
As a poster on a separate article suggested, a committee of academics who profess accountancy instead of economics should fit the bill.