December 1, 2009 / 5:38 PM / 10 years ago

EU regulator calls for accounting overhaul

BRUSSELS (Reuters) - One of the world’s top accounting standards setters must be completely overhauled to make it more attuned to stakeholders, a top European Union regulator said on Tuesday.

Eddy Wymeersch, chairman of the Committee of European Securities Regulators (CESR), said governance of the International Accounting Standards Board (IASB) needed reviewing.

“That is the cause of everything,” Wymeersch told the European Parliament’s economic and monetary affairs committee in the latest rebuff to the IASB, which sets accounting rules used in 110 countries, including the EU’s 27 member states.

Last month, the EU’s executive European Commission delayed endorsing an IASB revamp of how banks must value their assets.

Countries such as France and Germany feel the reform did not go far enough in limiting the use of so-called fair value or marking assets to the going rate. The Commission’s endorsement is needed to apply the change in the EU.

Wymeersch questioned whether there was adequate accountability at the IASB, a London-based body that has already made several changes to its governance, such as setting up a new monitoring group.

“I can remind you the CESR thought it should be in the monitoring group but that did not take place. In my view, this has to be drawn up again and start from scratch,” he said.

Reform of fair value accounting rules was urged by the G20 group of countries which includes several EU states and the Commission.

The U.S. Financial Accounting Standards Board has proposed widening the use of fair value, triggering alarm in Europe.

The G20 has also set a mid-2011 deadline for converging the world’s major accounting rules to cut red tape and costs for multinational companies and make it easier for investors to compare firms.

“Please, technicians, come forward with a solution that everybody accepts,” Wymeersch said.

Wolf Klinz, a Liberal lawmaker, said accounting rules in Europe and the United States were drifting apart.

“Do we understand how the IASB works... it’s a free floating entity not accountable to anyone,” Klinz told the parliamentary committee.

Germany has threatened to block a reform of accounting rules if the IASB makes too many concessions to the U.S., German newspaper Handelsblatt reported on Tuesday.

Reporting by Huw Jones, editing by Victoria Main

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