Experts demand reform of international standards
IFRS need more oversight - possibly even the UK Parliament
Sir David Tweedie, chairman of the IASB
A group of experts hascalled for a radical overhaul of international
accounting standards blaming them for producing “adverse consequences” in the
financial crisis and describing them as “flawed”.
The broadside came in a letter to The Times signed by eight
academics, fund managers and politicians.
The letter said: “The Deputy Prime Minister is seeking views on repealing
burdensome regulation. A good place to start is the International Financial
Reporting Standards, (IFRS).
“Before IFRS the accounting ground rules were set down by Parliament, and
their interpretation was delegated to the UK Accounting Standards Board, with
the objective that accounts gave a true and fair view.
“IFRS introduced in 2005 via EU regulations undid that and is recognised to
have been a major factor in mispriced credit going unchecked, leading to the
financial crisis. Neither boards nor regulators have been successful in working
with it.”
The letter is signed, among others, by MP David Davis, chairman of the Future
Banking Commission; Prof Stella Fearnley, University of Bournemouth; Prof Shyam
Sander of Yale University, renowned forensic accountant Emile Woolf and Tim
Bush, a member of the Urgent Issue task Force of the UK Accounting Standards
Board.
The group accuses IFRS of helping overstate bank profits in the good times
and accelorating their collapse when things turned sour.
They propose that accounting standards need more oversight even if that means
putting them before the House of Commons.
“It is time that accounting standards were subject, once again, to scrutiny
by a wider peer group than of late, and if necessary by Parliament. IFRS
conflicts with the UK’s traditional ‘true and fair’ view, and in practical terms
has had adverse consequences. In our view it is time for a significant rethink.
”
International accounting standards were introduced via EU legislation in
2005. They are set and managed by the International Accounting Standards Board
(IASB) based in London. The standards have been adopted by 100 seperate
countries. A central plank of the IASB’s work is a convergence project bringing
international standards and US standards into line.
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