Speaking before the US Senate committee on banking in Washington, Sir David said: ‘No individual standard setter has a monopoly on the best solutions on accounting problems’.
His statements were seemingly another dig at the US Securities and Exchange Commission for refusing to put its full backing behind international standards while the rest of the Western world’s financial markets are moving towards harmonisation.
Despite praising US GAAP, Sir David said: ‘That does not mean that every individual US standard is the best, or that the US approach to standards is the best.’
US regulators, standard setters and analysts are taking a long hard look at how US GAAP is formulated and what went so wrong in relation to Enron’s unprecedented collapse, once the seventh largest public company in the US.
‘No national standard setter is in a position to set accounting standards that can gain acceptance around the world,’ urged Sir David.
He also took the opportunity to highlight the failings of the ‘rule-book mentality’. International standards and UK standards are based on principles, unlike US GAAP which is based on detailed rules.
‘Put simply, adding the detailed guidance may obscure, rather than highlight, the underlying principle,’ Tweedie told senators.
Fears were growing around the world that US GAAP would become the international accepted accounting rules if the IASB’s trustees of which Paul Volker, former chairman of the Federal Reserve, is chairman, had not managed to persuade regulators and business to fund the body.
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