Keep politics out of rule making
The head of the US accounting standard setter has warned that politics should be kept out of rule making, or the prospects for global convergence could be irreparably damaged.
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Speaking to Accountancy Age Robert Herz, chairman of the Financial Accounting Standards Board, said that further intervention by politicians, as happened with financial instruments standard IAS39, could put up severe barriers to the convergence of accounting standards between the US and the rest of the world.
‘If every time we or the IASB comes up with something that certain groups don’t like and they convince politicians to support their cause, it is going to make convergence very hard,’ he said.
Aside from IAS39, Herz is facing opposition in the US to the introduction of a standard on share options similar to IFRS2. Congress is currently debating whether the standard should be implemented as it is, forcing companies to book shares awarded to employees in the same way as wages.
But Herz is hopeful that a degree of convergence can be achieved in the medium term.
‘Truly common standards are a long way off, but to have significantly common standards that wouldn’t require reconciliation is probably only a few years away,’ said Herz.