Tweedie has long been an advocate of following the International Accounting Standards Committee in policy unless there were fundamental differences of opinion and earlier this year, the global standards setters finally decided that they should add their weight to the development of global standards with a breakthrough agreement.
The decision, taken at the end of November in Venice, agreed what is hoped to be the future of a single global standards setters that will unify the profession and act as a launch pad for the development of one set of accounting standards that will be accepted around the world.
Although the deal still has to be approved by members later this month, it received the unanimous backing of those with views as diverse as the US Securities and Exchange Commission and the European Commission.
The original proposals were scrapped several times and the revised blueprint marks a major U-turn in favour of a structure based around the SEC concept of a board of trustees comprising 19 individuals who will be empowered to select 14 members of the main board.
Members of the ASB were delighted with the sudden breakthrough in negotiations which have been dogged by differences which divided the US and European camps.It all came too late, however, to save BMW having to sack thousands of people from Rover’s Longbridge site when the company became a high profile loser in delays to producing a single set of standards that could be accepted for international statements.
BMW disclosed losses in its Rover operation of £91m in 1997 that would have been a £20m profit under UK rules. The difference was due to the rate at which investments are written off under the two systems.
The German car company had expressed a strong interest in moving towards international standards but were scuppered by the failure of international securities body, IOSCO concluding its talks with the IASC on whether one accounting standard may be accepted in several jurisdictions.
But the major changes this year have not been limited to the international stage. Closer to home, Tweedie told accountants that they faced becoming ‘irrelevant’ unless they involve themselves more in issues facing their clients.He predicted a major shift in balance sheets over the next few years resulting from several initiatives which are soon to be finalised, including lease accounting, derivatives, deferred tax and pensions costs.
Critics said that the new deferred tax and pensions standards would do little but create more work for accountants rather than meet Tweedie’s aim of making accounts easier to understand, but he has remained adamant about the need to improve accounts to reflect more analysis.
He has also pledged to launch a new FRS 3 new summer that will galvanise the movement to produce a single performance statement to merge the profit and loss with the statement of recognised gains and losses.’We must get away from looking at numbers and start analysing what they mean,’ he says.
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