Europe should not lose the “chance of a generation” to establish global accounting standards, the head of the international rulemaking body warned lawmakers on Monday.
Sir David Tweedie, head of the International Accounting Standards Board, told European parliamentarians that he believed that the chance of establishing global standards were “good” and that the US would decide to converge with the international financial reporting standards by 2012.
The IASB’s standards are now used or being adopted by 117 countries, including India, Japan, South Korea and Canada.
But Sir David warned: “This is the last chance for a generation for global standards – we won’t get another chance.”
EU lawmakers, he added, needed to realise “how important it is that we have Europe’s backing”.
Sir David’s comments to the European Parliament’s economic and monetary affairs committee follow calls at this weekend’s G20 meeting for one clear set of global accounting standards.
However, the issue remains controversial, with others arguing that the drive for a single approach impinges too far on national sovereignty. Henri de Castries, head of France’s largest insurer Axa, claimed at the weekend that the IASB was “accountable to no one” and that the setting of accounting norms was “an instrument of political sovereignty” and too important to leave to accountants.
The IASB is working on revised rules to cover financial reporting in the wake of the recent crisis. Sir David said that, while there might be some changes to the current draft proposals on how deal with impairment issues – so-called IAS 39 – he was still commited to having that completed for use by the year-end.
“We are on track to meet that commitment,” he said, noting that well over 200 responses had been submitted and that additional board meetings to discuss refinements were now taking place.
He stoutly rejected the alternative suggestion that the IASB take more time to devise the new rules on this front, and perhaps adopt the comparable US standard in the meantime. He pointed out that EU lawmakers had previously warned against taking on US standards and said such a course “would neither create a level playing-field nor put an end to the level playing-field question”.
“Our impairment rules are very different. On many issues, EU financial institutions would not want us to adopt the US approach on impairment. For example, we permit reversals of losses in a number of instances, where the US does not,” he said.