Checks On IASB Called For
As of next year, the International Accounting Standards Board will assume considerably more influence when its rules form the basis for a single set of global standards.
To balance this increase in power, the G20 has called for the creation of an independent monitoring body. This was necessary, said David Wright, deputy head at the EU’s European Commission internal market unit, to “depoliticize” accounting standard setters.
This follows from the G20’s agreement last September that mark-to-market rules needed to be resolutely and quickly reformed – although the aggressiveness of this stance alarmed certain parties.
“Full respect to due process is a must,” said Fernando Restoy, chairman of the Committee of European Securities Regulators and quoted by Reuters. ”The monitoring board is a very big step forward but there is room to think a bit more about the right governance structure.”
Critics in the US and worldwide blame market-to-market rules for amplifying the impact of the credit crunch by forcing banks to price assets at depressed prices, triggering fire sales to replenish capital. These rules were subsequently eased by in the US by the Financial Accounting Standards Board in April 2009.
