Accounting for bullies
The Washington Post has a nice article on the European Commission's bullying of the IASB.
In October, largely hidden from public view, the International Accounting Standards Board changed the rules so European banks could make their balance sheets look better. The action let the banks rewrite history, picking and choosing among their problem investments to essentially claim that some had been on a different set of books before the financial crisis started.We already know that David Tweedie, chairman of the IASB wasn't happy about this and reportedly threatened to resign. But what is new is that the Americans are waking up to the implications of this bullying.
The results were dramatic. Deutsche Bank shifted $32 billion of troubled assets, turning a $970 million quarterly pretax loss into $120 million profit.
"Right now, there is no credibility," said Robert Denham, chairman of the Financial Accounting Foundation, which oversees the FASB. "If we are going to have global accounting standards, my view is that is not going to work if the IASB is going to be jerked around by the European Commission.Over lunch on the 24th a leading member of the IASB suggested to be that the FASB was irrelevant and that IAS would soon rule the world. Perhaps the Americans won't go gentle into that good night.
Labels: Accounting
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