PracticeAuditEC seeks common ground with standard setters

EC seeks common ground with standard setters

Europe's new commissioner for internal market, Charlie McCreevy, has taken another swipe at the way in which the International Accounting Standards Board operates, as he seeks to find a compromise over the contentious financial instruments standard IAS39.

Link: McCreevy: EU should have more power over IASB

Speaking to the economic and monetary affairs committee of the European parliament last week, the former Irish finance minister called for greater accountability from international standards setters, particularly the IASB. He attacked the board for its intransigence on the issue of IAS39.

‘We … need a more welcome approach from the IASB and more effort to find common ground,’ said McCreevy. ‘We all want decisionmaking that is free from undue political interference, but the standards it draws up must meet the needs of users and be in touch with business reality.’

He made the comments as he laid out the commission’s three-point plan to improve the transparency and accountability of the IASB, which is currently reviewing its constitution. He added that the EC was working hard to influence this reform process.

McCreevy argued that an effective oversight body should be in place to approve the IASB work programme, and that such an agenda ‘should take account of our priorities’.

‘Representation within the international standard setter and within a public oversight body should correspond more appropriately to jurisdictions that directly apply the standards,’ added McCreevy, echoing his predecessor Frits Bolkestein’s concerns that Europe was not well represented in the board’s make-up.

McCreevy also raised concerns over conflicts of interest at the IASB, which is sponsored by voluntary contributions from banks and listed companies. He welcomed moves by the IASB’s board of trustees to change this.

‘Most people in the profession would be against political interference from the EC, but there is a need for more challenge in the standard setting process from the business community,’ said Michael Hughes, chairman of the audit practice at KPMG.

Hughes added that, so far, the IASB had not been good at explaining the reasoning behind some of the decisions it has made.

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