[A-List] EU steps up accounts pressure

["Sabri Oncu" <soncu@xxxxxxxxxxx>]

EU steps up accounts pressure
By TOBIAS BUCK and BARNEY JOPSON
Financial Times, March 8, 2005  

* Brussels asks for more power in setting standards

* Experts fear move would curb US influence and imperil convergence plan

The European Union has formally asked to be given more powers on the body
that sets international accounting standards, a move that would go hand in
hand with curbing US influence on global reporting rules. 

Its proposal, obtained by the Financial Times, said that in appointing
members to the International Accounting Standards Board, a clear preference
should be given to countries that applied the standards or had promised to
implement them soon.

The same system should apply to the board of trustees that oversees the
London-based body, according to an EU proposal sent to the IASB this week.

Accounting experts warned that, if implemented, the EU recommendations could
imperil the prolonged efforts to narrow differences between accounting
standards across the world.

Most investors and companies back harmonisation because it should lead to
single sets of accounts that are cheaper to produce and easier to read.

Because the Union is the biggest economic bloc that implements IASB rules,
such a rebalancing could drastically increase its say in the drafting
process.

Controversially, the proposal would lead to a much lower profile for the US.
Although the US does not use IAS, it holds four seats on the 14-strong IASB.
North Americans also account for six of the 19 trustees, the same number as
the Europeans.

One reason for the heavy US presence is that American and international
standards-setters are working to harmonise their rules.

"It has long been an aspiration that the US would move to international
accounting standards," said Ken Wild, global head of international
accounting standards at Deloitte. "If you reduce the American presence at
this stage, you will put that back by years and years."

European officials said the Union was still committed to the convergence of
international reporting rules and was working with the US towards that goal.
"This is about finding the right governance and accountability structures
for the IASB," an EU official said.

The comment letter was one of several dozen submitted in recent months to
IASB on the body's constitution. Paul Volcker, head of the IASB trustees, is
reluctant to bend to EU demands and wants to take account of the views of
all interested parties.

But the EU feels the IASB lacks accountability and has been too dismissive
of European concerns. Those perceptions were born out of last year's quarrel
over IAS 39, an accounting standard that raised objections among regulators
and some banks, but which the Union was incapable of amending because of the
IASB's structures. The EU decided to implement the standard minus certain
key provisions.

The latest EU reform proposals also contain a call to beef up the role of
the trustees overseeing the IASB. A letter accompanying the proposals says:
"We feel that the board of trustees should monitor more closely the
activities of the IASB, be able to approve the IASB's work programme, taking
into consideration the public interest."

The EU also calls for more transparency in the way trustees are appointed.
It says "trustees should no longer be able to appoint their successors"
though makes no concrete proposals for an alternative procedure.