Boyle rebuffs calls for EU regulation
The chief executive of the UK accounting regulator has played down calls for a regulator to enforce strict application of IFRS
Responding to suggestions from European think tank Bruegel, which argued for
a European regulator to police interpretations of the new standards, Paul Boyle,
chief executive of the
Financial Reporting
Council, said: ‘This seemed to be based on an idea that we need to promote
greater consistency of the application of IFRS. I don’t think that’s necessary.
‘If you have the standards which are principles based, with some rules, then
it is inevitable that you will have some differences of application. That’s
normal and to be expected.’
Bruegel, which is sponsored by European governments, made the suggestion last
week in a review of IFRS, suggesting that such an organisation would have
provided guidance for IFRS implementation.
Boyle said: ‘If you want to eliminate differences you will be forced into
very prescriptive rules-based standards or standards plus detailed guidance.
‘The search for perfect comparability is mistaken and would lead to a very
detailed rules-based approach which is not what we want in Europe.
‘There are market forces at work which will progressively improve the way
IFRS is implemented. It is not necessary or helpful to have a very detailed
regulatory arrangement,’ said Boyle.
Boyle was however sympathetic to other suggestions of the paper, which
criticised the ‘special’ relationship the International Accounting Standards
Board has with the American Financial Accounting Standards Board.
The paper’s author, Nicolas Véron, called on the IASB to make itself
accountable by giving a formal role to its stakeholders in its governance and to
take an uncompromising approach to standards’ quality, by even possibly
rescheduling the convergence process with US GAAP, if necessary.
‘We know that persuading the SEC to eliminate their US GAAP reconciliation is
a very important short term goal. But in the long term, it’s not appropriate for
an international standard setting board to have a unique relationship with one
of its jurisdictions. Each jurisdiction should be treated more or less equally,’
said Boyle.