Tweedie nearly quit after fair value change

Sir David Tweedie considered stepping down from his position as the head of
the International Accounting Standards Board (IASB) after effectively being
forced to allow the reclassification of hard-to-value financial assets, he
admitted at a Treasury committee meeting yesterday.

When asked whether he had thought about resigning, Sir David said that he
had, but was determined to help achieve a single set of accounting standards.
‘We’re almost on the verge of winning the international project. I would hate to
walk away at this stage.’

Sir David said that the IASB took the drastic move without the usual due
process – involving a consultation period – because the threat posed by an EU

would have totally derailed convergence efforts.

‘If the EU had done another carve-out then the US would have said this is
impossible,’ he said. ‘That would have crippled the whole global process. The
European Commission said that the legislation to implement the carve-out was all
ready to go. Accounting in Europe would have been totally out of control if they
had managed to push through the carve-out.’

Flanked by Financial Reporting Council chief Paul Boyle and ICAEW chief
executive Michael Izza, MPs levelled accusations of

the IASB being ‘spineless’ and ‘caving in’ by allowing reclassification of
certain assets, but Sir David said that the alternative would have been

far worse.

Boyle said that this was a key juncture for convergence efforts: ‘We could
look back on this as the year that the dream of global accounting standards was
killed, or it could be the year we saw the rules made more robust. The jury’s
still out.’

Sir David said the proposed carve-out would have lifted restrictions on
taking financial instruments out of their usual trading categories: ‘You could
have put them anywhere. It would have been a total free-for-all.’

Speaking to Accountancy Age after the meeting, Sir David said the political
pressure brought to bear on the IASB to suspend fair value had been
‘regrettable’. He added: ‘We’re not going to be pressured into rushing something
through again.’

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