La Tribune: A Flimsy Triumph for Global Accounting Standards
16 September 2008
Nicolas Véron identifies a risk of politicization of the standard-setting process to the detriment of its ultimate aims.
Nicolas Véron identifies a risk of politicization of the standard-setting process to the detriment of its ultimate aims. The global accounting experiment is too recent to conclude that it constitutes lasting success, he argues, and puts two key questions that remain open concerning the viability of IFRS.
- First, implementation. Good standards are not enough: they must also be applied properly. But in many countries public regulators remain tolerant of ‘nostalgic accounting’, when companies cling to practices inherited from former national standards at variance with IFRS orthodoxy.
- Second, maintain the quality of standards over time. Trustees are preparing to submit themselves to the authority of a ‘monitoring group’ whose exact legal status remains fuzzy, is designed to control the appointments and reappointments of Trustees and thus, indirectly, the whole governance of IASB. It runs the risk of proving counterproductive, if it ends up reinforcing politicisation of standard-setting and reducing both its efficiency and its quality.
Trustees must show more institutional creativity if they are to anchor the IASB with its various public and private stakeholders, Véron states. In case of eventual failure, the recent decision of the SEC will have been a Pyrrhic victory, and perhaps herald a new era of fragmentation of the global financial sphere.
The full article as published in La Tribune is attached below
© La Tribune
