Europe's IASB concerns voiced at global meeting

Michel Barnier, head of internal markets at the European Commission

Europe has reiterated its concerns about the International Accounting
Standards Board’s (IASB) governance, in a meeting of senior regulators from
across the world today.

The rare gathering of global leaders took place amid concern about US
adoption of international accounting standards, and continuing speculation on
Europe’s support of the
IASB.

Michel Barnier, head of internal markets at the
European
Commission, said there continues to be governance issues with the
board, in comments made at a meeting of the IASB’s monitoring board in London
this afternoon.

“Concerns remain in Europe remain about the IASB’s governance,” he said.

“There is still weak accountability…and the IASB still [displays] reluctance
to acknowledge the effects of its standards on financial stability.”

Mary Schapiro, chairman of the
US Securities and Exchange
Commission, said at the meeting there was a need for consistent
application for international accounting standards.

“If we have these standards, how do we make sure they’re consistently
applied…that is an issue we hope [the monitoring board] have ideas about.”

Also discussed at the meeting was progress towards convergence between
international and US accounting standards. The US is expected to release its
fair value rule within the next two weeks, however converging this rule with its
international counterpart remains the “most difficult block”, said one member of
the monitoring board.

The meeting comes as Europe still decides whether to adopt the IASB’s
standard on fair value, released in the wake of the crisis. The standard uses a
mixed measurement model to value financial instruments, mixing fair value and
amortised costs.

The IASB brought forward the standards after pressure from Europe in November
2009. The rule has been adopted in some countries across the world, including
Australia and New Zealand.

Sir David Tweedie, chairman of the IASB, told board members that he is
striving to complete full convergence of international standards with the US but
short of this, it may have to produce comparative guidance to help users
understand the differences between the two.

Another issue covered at the meeting was the IASB’s ongoing funding issues,
which last year saw it dip into its reserves to operate.

Plans were revealed to funnel the IASB’s European contributions through the
European Union. Barnier said he would hold bi-lateral discussions about
potentially increasing Europe’s contribution towards the IASB, but gave no
commitment that the funding would increase.

Further reading:

IASB
should put this battle on hold

Gallic
charm offensive – Michael Barnier, Internal Markets commissioner

Finance
ministers mull fresh measures to aid regulators