New standards may mean ‘war’

The finance director of pharmaceutical giant GlaxoWellcome last week issued a stark warning that introducing International Accounting Standards could spark a new war between European and US standard-setters as they compete for global leadership.

Speaking at an English ICA conference, John Coombe emphasised the need for a universal set of accounting standards, but highlighted the lack of a natural leader to monitor them.

He said: ‘IASs are seen as very international but do not have enough US influence for our American friends. FASB, the US body, has proposed that it becomes a world accounting standard-setter.’

Coombe’s comments follow closely on the launch of the European Commission’s action plan for a single capital market, which includes proposals to allow companies to adopt IASs.

But Coombe also raised concern about the leadership of the IAS Committee on the European accounting stage, given that in many instances the ASB, the UK accounting standards body, is ‘ahead of the IASC’.

This, he said, could allow UK companies to ‘cherry-pick’ between regimes.

Coombe said he would prefer to see domestic corporates simply making a reconciliation statement to IASs. He went on to argue that there was a need for greater harmonisation which could only be achieved by more regulation, in order to allow global companies to function more efficiently, particularly with regard to listing requirements.

Current regulations in the major financial markets of London and New York force companies to make difficult choices when listing and raising capital, he said, with the added burden and expense of different legal and regulatory systems.

‘The removal of accounting barriers would make a significant start,’ he said.

However, Coombe added that more positive action was needed because a reliance on market forces to push for a global market could be scuppered by national jealousies.

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