'Special interests' undermining standard setting: Herz

Companies which had to be bailed out by the American taxpayer tried to lobby
the US standard setter in the wake of the global crisis, a senior financial
figure has warned.

Financial Accounting Standards Board chairman Robert Herz said companies
which had to be rescued by the American government lobbied the accounting
standard setter in a move which had the potential to undermine the integrity of
the body and politicise the independent account setting process.

In a speech, delivered to the US National Press Club, Herz said the
politicisation on behalf of `special interests’ risked eroding public confidence
in financial reporting.

`Unfortunately, there have been certain major companies — including ones that
subsequently failed and had to be rescued by the government — and industry trade
groups that have sought political intervention into accounting standard
setting,’ he said.

`While that is their right, and while we certainly welcome active dialogue
with lawmakers, politicisation of accounting standard setting by special
interests risks undermining public confidence in the integrity of financial
reporting.’

The comments follow recent criticism of FASB by oversight body the Investors
Technical Advisory Committee, which said the US standard setter’s independence
risked undermined by private interests.

`[We have] grave concerns about what we believe to be a substantial erosion
in the independence of the accounting standard setting process,’ the committee
said in a letter.