IASB accounting body rejects EU parliament's funding conditions

Mon Oct 14, 2013 5:29pm EDT
 
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By Huw Jones

LONDON (Reuters) - The group which writes global accounting rules said the European Parliament was threatening its independence by calling for a fundamental change to the way it sets standards, and linking it to future funding.

The parliament wants the International Accounting Standards Board (IASB) to include a specific reference to "prudence" in its basic tenets, to put pressure on accountants to err on the side of caution when scrutinising losses at banks.

In a draft law, it wants to make future contributions from the European Union - which provides about a third of funding for the IASB - effectively conditional on this reform.

Lawmakers believe the prudence reference could help avoid a repeat of the 2007-09 financial crisis in which EU taxpayers had to put billions of euros into struggling banks.

IASB Chairman Hans Hoogervorst described the parliament's stance as "highly worrisome".

"This is something we cannot accept," he told a meeting of his body's advisory council on Monday.

"If Europe is going to do this, other parts of the world might be encouraged to do so. It's a threat to our independence," he said.

The European Parliament's work is being led by lawmaker Theodor Dumitru Stolojan, who said there were concerns about how the IASB is run and about some of its standards.   Continued...