PracticeConsultingIASC dumps two-tier reform plan

IASC dumps two-tier reform plan

The International Accounting Standards Committee has killed off plans to introduce a controversial two-tier board that could have spelt the end of plans to create a single global standard setting body.

In a compromise presented to the IASC board meeting in Warsaw last week, secretary general Sir Bryan Carsberg and chairman Stig Enevoldsen abandoned the idea of a standards development committee staffed by full-time technical specialists that would have backed the main IASC board.

They opted instead for a single board of 25 members designed to keep the warring factions at the negotiating table.

The committee’s relationship with the main IASC board had provoked strong reactions from the US contingent, who felt it would slow progress, and from the European Commission, which felt it was not democratic enough.

The new plan puts forward a board of around 15 full-time standards setters and 10 part-time members. They would be drawn from business and political circles and play a similar role to non-executive directors in business.

‘The key to the proposals is making sure the Americans don’t walk,’ said Accounting Standards Board chairman Sir David Tweedie, who sits on the IASC board. ‘Their initial reaction was that this could be a basis for going forward.’

But European Commission financial information and company law unit head Karel Van Hulle was less supportive. Although he welcomed the move to ditch the two-tier system, he warned that standard-setters were not the only ones who should contribute to the debate. He said a future IASC should be more representative of those applying accounting standards.

‘I think the problem lies in how this will work in practice. This cannot be legitimised unless you have all interested parties on board. We will certainly be commenting on the proposals over the next few months,’ he said.

IASC international accounting fellow Paul Pacter said that the move was a reaction to concerns that a two-tier board would encourage conflict but added that the new set up could require an extended period of public consultation for each standard.

He hoped the plans would be seen as a ‘mid-course correction’. Details have yet to be finalised.

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