It was a sorry week for the International Accounting Standards Board last week. Where once the attacks came at the standards themselves, last week they turned personal.
First came Tim Bush, a director at Hermes Asset Management, who lambasted the board as ‘yesterday’s men’ and called for them to be removed during a breakfast seminar on fair value accounting attended by many top City accountants.
Then came the attack of BP’s chief accountant, Michael Starkie, who, in a letter to the Financial Times, said there were ‘grave misgivings’ about IFRS and insisted that the only solution was to ‘reconstitute’, or remove, the current board.
I wanted to write that the pressure on the IASB and its chairman, Sir David Tweedie, is now more intense than ever. But I think I would probably be wrong. Sir David has weathered other storms, been brutalised and insulted, name-called and threatened, and yet he keeps on. As far as I can tell, his personality and intention remain as robust and intact as ever. He won’t back down.
The question is whether the IASC, the body of trustees that governs his board, its relatively new chairman Gerrit Zalm, and the new oversight body coming that will take care of them, will begin to feel the heat.
If all these bodies start feeling that something needs to be done, that will exert significant internal pressure on Sir David to change the agenda of the board.
But would they ditch him and board members? It’s difficult to see it happening. The IASB has responded to various complaints, with projects that are underway on an accelerated timetable. Confidence may be low in the IFRS project in some quarters, but reconstituting the board now would send shockwaves through markets around the world. It’s doubtful anyone would take that risk.
Gavin Hinks is editor of Accountancy Age
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