Once again, Ernst & Young has donned its gloves to give the Accounting Standards Board (ASB) a pounding over its Statement of Principles – or, in this instance, its continued absence. When it last appeared in 1996, the SOP received a resounding raspberry from the profession – as E&Y helpfully recounts in its latest report, ‘A Time for Action’.
E&Y’s UK senior partner Nick Land displays a keen nose for publicity and has succeeded in positioning his firm as the champion of traditional UK practice. And with technical guru Ron Paterson – one of the authors of ‘UK Generally Accepted Accounting Practice’ – in its corner, E&Y has landed some telling blows.
The ASB’s Sir David Tweedie counters that the board’s work is driven by the ultimate need to harmonise global accounting standards. E&Y might win friends by playing to the gallery, but the UK would ultimately suffer if its standards diverged from the international norm.
But E&Y is right to raise the debate.
As Paterson says, the firm is not engaged in a popularity contest, it is raising serious concerns about standards that produce inconsistent results because they are based on theoretical concepts that do not stand up in practice.
Sir David should drop his defensive stance and bring forward the latest exposure draft. Unless its underlying philosophy can stand up to such public challenges, the ASB’s clout within the profession could be severely diminished.
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