RegulationAccounting StandardsMcCreevy’s European omission

McCreevy's European omission

McCreevy’s refusal to sign key documents on international standards casts doubt over IASB’s future

EU commissioner Charlie McCreevy

EU commissioner Charlie McCreevy

The chasm which separates the
International Accounting
Standards Board
and Europe has been exposed after EU commissioner Charlie
McCreevy refused to sign documents which enshrine the values of international
standard setting and underpins a key oversight body.

The absent signature has led to a stand off between the IASB and the European
Commission.

McCreevy’s signature is noticeably missing from both the charter and the
memorandum of understanding which set out the principles of international
standard setting and underpin an oversight body, known as the monitoring board.

The monitoring board was set up in April to promote the continued development
of high quality accounting rules by the IASB and provide oversight on the global
standards-setting regime.

McCreevy has been relegated to the role of an ‘observer’ on the board until
he signs the two documents. A spokeswoman from the board said McCreevy indicated
he will ‘be able to sign the charter and the MOU’ at the board’s 6 July meeting
– but McCreevy’s office has offered no such assurance.

A spokesman told Accountancy Age there remained ‘reservations’ about
the IASB among the EU’s 27 member states and their finance ministers, which has
prevented McCreevy signing the document.

‘Seeing the reservations, particularly on the side of the European
Parliament, the commissioner intends to meet with the newly-elected parliament
to discuss further progress in autumn,’ he said.

The monitoring board is comprised of prominent regulators including the US
Securities and Exchange Commission and the Japanese Financial Services
Authority.

It is understood that McCreevy’s reluctance to sign the document is due to
ongoing European criticism of the IASB, primarily from the French and German
camps which believe there is an anglocentric thread running through the IASB’s
decisions and attitude.

The pair previously attacked the IASB’s revision of IAS 39 – criticised for
exaggerating the effects of the international financial crisis – last month,
making their concerns to McCreevy in a joint letter.

At the last meeting of European finance ministers German minister Peer
Steinbrück said the IASB should release its review of financial instruments ‘not
at the end of the year, but in the autumn’.

Finance ministers at the meeting instead reaffirmed their previously held
timetable holding the IASB to its promise to release revised standards in time
for 2009 accounts.

Dangling above the IASB is the possibility that Europe abandons the
international standard setting system in favour of a European standard setter –
a move which could sound the death knell for global standards.

Deloitte’s senior technical partner Ken Wild said the international regime
would not survive without Europe on board. ‘It would be the end of international
accounting standards – the world would fall apart,’ he said. ‘There is no point
in having international accounting standards without Europe.’

Last October Europe threatened to amend its accounting rules independently of
the IASB – a move later described by IASB chairman Sir David Tweedie as ‘a blunt
threat to blow the organisation away’.

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