Heads of state endorse single standard setter but demand better governance
The G20 meeting said the international accounting standard setter should
promote financial stability – a significant departure from its core remit – but
through the governance of the body.
The communiqué issued by the G20 leaders in Washington placed accountancy and
transparency as one of its five principles for reform.
It emerged last week that politicians were seeking a financial stability
remit for the standard setter, but critics had claimed that the role of
improving transparency was incompatible with guarding financial stability.
However, the G20 statement said it is through ‘enhanced’ governance-including
a review of membership and ensuring the transparency and accountability of the
standard setter – that stability should be addressed.
The statement appears not to rule in or out any specific measure for the
IASB, although there is no direct demand to maintain stability through the
manipulations of accounting standards themselves.
The communiqué said: ‘With a view toward promoting financial stability, the
governance of the international accounting standard setting body should be
further enhanced, including by undertaking a review of its membership, in
particular in order to ensure transparency, accountability and an appropriate
relationship between this independent and the relevant authorities.’
Last week Gerrit Zalm, the chairman of the parent body for the International
Accounting Standards Board, felt the independence of the body was so threatened
in advance of the G20, that he wrote an open letter directly to President Bush,
and the other heads of state, asking them to protect the independence of the
What the G20 communiqué does deliver is an endorsement of a single set of
global standards – an ambition that could not be achieved without a single
Last week a financial stability remit received little support in the
profession. Ken Wild, IFRS leader at Deloitte said accounting was ‘about
transparency and that’s a different subject to financial stability’.
Work has been under way for some time to improve the governance of the IASB
and its parent body the IASC with the addition of a new monitoring group that
has direct accountability fo ‘public authorities’. The issue for the IASB will
how much influence the new group will have over its agenda.