Paul Volcker is to be replaced by a distinguished Italian banker as head of the trustees who oversee international accounting standards, while Sir David Tweedie has been reappointed as chairman of the standard setters.
The appointment of Tommaso Padoa-Schioppa, a putative candidate for the role of governor at the Bank of Italy and a former European Central Bank board member, was one of several changes announced yesterday in an effort to improve accountability at the International Accounting Standards Board.
The switch from a US chairman goes some way to addressing European Commission concerns that the IASB is not sufficiently sensitive to its European constituents.
The IASB also announced that the first representatives from China and India had been appointed to the 22-member trustee group, as both countries move closer to using international accounting standards.
Sir David Tweedie, who will start another five-year term in July, has attracted much of the criticism the IASB has faced this year as international accounting standards are introduced across the European Union.
Mr Padoa-Schioppa faces a difficult role that requires the management of powerful interest groups. The development of international accounting standards – now used in more than 90 countries – inspires conflicting passions among a range of companies, investors, regulators and accountants.
Mr Volcker, a former chairman of the US Federal Reserve, was a staunch defender of IASB independence. The European Commission this year launched a campaign to improve the organisation’s governance and accountability and has forced moderate changes.
A spokesman for Charlie McCreevy, EU internal market commissioner, said the Commission welcomed the announcements but stressed that Brussels was particularly happy at the appointment of Mr Padoa-Schioppa. “He is excellently qualified for the post,” he said.
During Mr Volcker’s five-year tenure, corporate scandals such as Enron and Parmalat increased calls for a global set of high-quality accounting standards. Accounting rules can have a significant effect on share prices and the cost of capital by altering reported profits and company balance sheets.
Sir David’s reappointment was welcomed by Stig Enevoldsen of the European Financial Reporting Advisory Group, a private organisation that represents accountants.
“I don’t agree with all the decisions and the direction [the IASB] is going but I think he’s the right man,” he said.
“He has a political ability to understand the winds blowing around him.”
To balance Mr Volcker’s departure, two powerful Americans are to join the trustees: Samuel DiPiazza, chief executive of PwC, the world’s biggest accountancy firm, and William McDonough, former chairman of the Public Company Accounting Oversight Board. Mr Volcker helped the IASB and the US Financial Accounting Standards Board to agree to a convergence project under which they now develop all new standards together.