Mario Christodoulou, Accountancy Age, Thursday 26 August 2010 at 09:40:00

Asian leaders resist political influence on standard setting

Asia is emerging as a significant force in international accounting and isbaulking at attempts to pressure standard setters, according to the head of theinternational accounting rule maker.

Sir David Tweedie, chairman of the International Accounting Standards Board(IASB), believes Asian nations will take a tough stance against politicalinterference in accounting standard setting as its influence on accountingrule-making grows.

?You are going to find Asia, who are pretty supportive, don?t like peopletelling [standard setters] what to do because they say, ?wait a minute, we aregoing to use these standards too, so why should tell us what to do - Get yourtank of our lawn?.?

The IASB were pressured by parts of Europe to change its fair value standardin the wake of the crisis. The fair value principle ravaged banks balance sheetsas asset prices plummeted in falling markets. Banks were forced to measure theirloan-books at depressed market prices which obliterated much of theirbalance-sheet value.

In October 2008, under pressure from Europe, the IASB carved out parts of itsfair value standard. It is in the process of replacing its standard in athree-phased project, due to be completed by June 2011.

Europe were the first bloc to adopt international standard in 2005. Sincethen India, Japan, Korea and other Asian nations have set in train processes toeventually adopt the international rules.

?We owe a lot to Europe. They set us going. They made the big decision. Ittook us by surprise suddenly 25 countries are using IFRS,? Tweedie said.

?When [accounting standards] are truly international, with Asia next year,Korea, India, Japan, they are all building up, Europe will not be the bigpower.?

For full details of Sir David?s interview, see Accountancy Age's 9 Septemberissue.

Further reading:

Tweedie:US fair value not proving popular

Tweediewarns US to adopt standards or lose influence