RegulationAccounting StandardsTime to decide What the IASB is for

Time to decide What the IASB is for

Is the world's standard setter still focused on its core task?

chairman, IASB

Sir David Tweedie

In January 2001 the IASB was formed with the ambitious but worthy goal of
creating a set of international accounting rules.
Its efforts met with great success under the leadership of Sir David Tweedie,
who is well on the way to fulfilling his aim of increasing the ‘transparency of
financial reporting by achieving a single, global method of accounting for
transactions’.
So it took some by surprise when, in June, the board announced it would provide
guidelines for corporate writing or, as the IASB puts it, ‘management
commentary’.
Some questioned whether this move was a step beyond the stated aim of a global
accounting method. After all, dissenters cried, what business does an accounting
rule-maker have telling managers how to explain their financial statements?

‘When you read between the lines, it raises some fundamental questions about the
role financial reporting has within the wider corporate reporting model – and
consequently, the role the IASB should play in this context,’ PwC’s senior
corporate reporting partner David Phillips wrote in his blog.
There’s also division within the IASB. Three of its members ­ Robert Garnett,
Prabhakar Kalavacherla and James Leisenring ­ voted against the proposal, in
part because they felt it was an ineffective use of resources. Should the IASB
be allowed to drift into non-core functions? Or should it concentrate on
accounting rules? It’s a telling fact that the management commentary guidelines
will not be mandatory.
Does the IASB’s goal, printed large on its promotional material ­ ‘to provide
the world’s integrating capital markets with a common language for financial
reporting’ ­ still guide its sail?
And who decides when it drifts too close to the wind?
Mario Christodoulou is a reporter on Accountancy Age

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