Advocate Says Global Accounting Standards Would Attract Foreign Investments
The chairman of the International Accounting Standards Board says a global set of accounting standards would be good for business.
Sir David Tweedie, on a tour of New Zealand promoting a unified accounting rulebook, told the New Zealand Herald that the 15 countries in the European Union have 16 possible ways of accounting. When 10 new countries join next month, the total will be 26.
All the countries would enjoy a positive economic spin-off under a single set of standards. Foreigners will be more likely to invest if a predictable set of rules were in place, he said.
That way, it doesn't matter whether a transaction takes place in Brisbane or Beijing or Brussels or Boston, it would be accounted for in the same way, Tweedie has said.
"We're actually talking not about accounting, but about world trade and growth."
The new international set of standards is likely to be adopted by more than 90 countries next year. New Zealand has until 2007 to adopt the standards.
Tweedie, however, finds one set of rules is no easy sell. The IASB has met with strong resistance and political interference, not to mention the difficulties in meshing the U.S. standards with the pending international set of rules.
The U.S. agreed about 18 months ago to look at the differences between the two sets of standards. He said two staff members were comparing the standards to determine which was better.
"Then they turn to the board who has the weaker standard and tell them they should switch," he said.
One big concern of Tweedie’s is that the U.S. Congress will interfere with the Financial Accounting Standards Board’s (FASB) recommendation that companies account for employee stock options as expenses on their books, Reuters reported. A change in that proposal could derail efforts to move toward one set of global accounting standards, he said.
"Convergence is extremely important to us. We will be horrified if politicians stepped in and forced FASB to alter standards," Tweedie said Monday in a joint conference call with Robert Herz, his counterpart at FASB.
Both IASB and FASB have recommended that companies expense stock options, and if approved, they would become part of global accounting laws from 2005. Congress, however, is facing fierce opposition from the technology sector.