Accounting standards: it professes to be a global body, but is it truly representative of all constituents? David Tyrrall fears for the International Accounting Standards Board's credibility.
| Author | Tyrrall, David |
| Position | TECHNICAL MATTERS |
The International Accounting Standards Board (IASB) has been extremely successful to date in promoting the harmonisation of accounting practices around the world. A welcome outbreak of mutual back-scratching between European and US regulators--"you accept my standards and I'll accept yours"--has been only slightly marred by disagreements in August over the interpretations of standards.
The IASB has been running a summer roadshow in an effort to listen to its European constituency and explain its position, but potential disagreements still simmer--notably. longer-term misgivings in Europe about apparent US over-representation on the board (see table, below). Al first glance, European nations do seem to be under-represented. Under the board's previous voting procedures a simple majority of board members (eight votes) was enough secure a new standard. A combination of US, Canadian and UK votes was sufficient, so perhaps it's not surprising that international standards bear remarkable similarities to their national standards.
The new IASB constitution provides for a super-majority of nine, thereby requiring one more anglophone vote--hardly representative of anything except US interests. If instead you see the UK as at least an intermittent part of Europe, then European and North American interests more or less balance each other. The real problem is with wider world outside the anglophone countries and Europe. It has only one representative: from Japan. Latin America, the former Soviet nations, India and China all score nil.
From a European point of view, the composition of the IASB's trustees is slightly more favourable. This is not surprising, since the old constitution allocated six trustees to North America, six to Europe, four to the rest of the world and three at random. The actual outcome was still anglophone domination. The number of trustees increases to 22 under the new constitution, with at least two of the three extra seats going to the rest of the world. The trustees choose the board members and also select themselves. which means that it'll still be hard for Europe or the rest of the world to influence the make-up of either the trustees of the board.
Two IASB trusteeships are allocated to partners from the big four accounting firms--Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers --as a constitutional right. There's been no suggestion that this arrangement should be reformed. The big four donate $1m a year each, which...
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