SEC WEIGHS IN ON INTERNATIONAL STANDARDS SETTING REFORM
The SEC staff, in a recent letter signed by Chief Accountant Lynn E. Turner, presented its comments upon proposed changes to the structure for international accounting standards setting. A working party proposed the changes in response to criticism that the current International Accounting Standards Committee (IASC) structure was subject to political pressure and inadequately funded, resulting in an uphill battle to produce high-quality accounting standards.
Much like FASB and the AICPA before it, the SEC staff believes that the working party proposal to reform international accounting standards setting does not go far enough. The proposal would give the IASC Board authority to approve or veto accounting standards that are the product of a standards development committee made up of representatives of national standard setting bodies.
"We believe that it is essential that a global standard setter be an autonomous decision making body with the ultimate authority to set its own agenda and to approve and issue both preliminary documents and final standards," the letter said. "Individuals serving on this body should not represent any professional organization, country, or other outside interest, but rather act solely in the public interest."
As of June 5, the IASC had received more than 80 comment letters from a wide range of interest groups, which have been classified into the following categories:
The proposal for restructuring and subsequent comment letters were on the agenda for the June 2830 meeting of the IASC Board in Warsaw, Poland. The discussion has been moved to the portion of the meeting that is open to the public. Until March 1999, IASC Board meetings were completely closed.
The IASC staff and the working party that developed the restructuring proposal face the difficult task
of addressing the many diverse comments. A sampling of the comment letters, available at www.iasc.org.uk, gives an indication of the problem.
While FASB, the AICPA, and the SEC staff are suggesting a structure very similar to FASB's, the European Commission (whose member states constitute the European Union) has taken a contrary view. Its comment letter, signed by Director General John F. Mogg, implies that the working party based its recommendations in large part on an existing national model and did not properly explore how a wider spectrum of participation could be achieved. In effect, the EC is criticizing using the U.S. model as a starting point for structuring an international body.
Compromise is Developing
Early reports from the June meeting indicate that the restructuring proposal will be changed to eliminate the authority of the IASC Board to approve or veto standards by the standards development committee. This move should clear the way for a structure that will be acceptable to most constituents.
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