Brussels seeks greater role in IASB decisions

From the Financial Times:

Brussels seeks greater role in IASB decisions

By Tobias Buck in Brussels and Barney Jopson in London
Published: February 3 2005 02:00 | Last updated: February 3 2005 02:00

The European commissioner in charge of financial regulation has called for the European Union to be given a bigger role in steering the body that sets international accounting standards.

Charlie McCreevy, EU internal market commissioner, said "representation within the international standard-setter and within a public oversight body should correspond more appropriately to jurisdictions that directly apply the standards".

Because the EU is the largest single economic area committed to using international accounting standards, such a move would increase Brussels' influence over the way the rules are set. The EU could, for example, have more seats on the IASB's boards, one official close to the commissioner said.

Mr McCreevy's remarks follow months of acrimony between the European Commission and the London-based International Accounting Standards Board over what Brussels sees as a lack of concern by the IASB for the views of the EU.

Although the Commission must endorse all new IASB standards before they enter into force in the EU, Brussels has little say in the actual drafting process.

This division of roles sparked a clash last year, when the Commission refused fully to endorse a new rule on derivatives, citing concerns by banks and regulators that the standards would increase volatility in companies' accounts.

Mr McCreevy said: "We need a more welcome approach from the IASB and more effort to find common ground. We all want decision-making that is free from undue political interference, but the standards it draws up must meet the needs of users and be in touch with business reality."

His comments follow criticism that the IASB rule-makers practice an academic form of accounting with little regard for its impact in the real world. The IASB, however, points out that it consults extensively with companies, investors and analysts.

Critics also complain that the board is dominated by experts from English-speaking countries. But the IASB says it is seeking the best-qualified technocrats and that many come from the anglophone world because that is where accounting standards are most advanced.