Critics Want IASB To Disclose its Business Backers | AccountingWEB

Critics Want IASB To Disclose its Business Backers

The International Accounting Standards Board (IASB) has had its ups and downs, as the drama of the Enron investigations unfolded.

First, it was the fair-haired boy, when Congress heard testimony that the Securities and Exchange Commission (SEC) should be allowed to accept IASB’s standards for accounting for stock options. This is an area in which the IASB reportedly gained a head-start over the Financial Accounting Standards Board (FASB) because the latter gave in to business pressures to keep these items off corporate income statements.

Then IASB's independence grew suspect, as Congressmen learned that Enron officials had considered making a donation to gain influence over the standard-setting process. An email written by former Andersen audit partner David Duncan and obtained through subpoena by Senator Carl Levin explained, "given Enron's desire to increase their exposure and influence in rulemaking broadly, he (Enron’s chief accounting officer) is interested in knowing whether these type of commitments will add any formal or informal access to this process."

The IASB’s response was controversial. It has refused to reveal the names of its 125 corporate donors and the amounts of their donations, at least until it can check with its donors to see if they might object. This position drew sharp criticism from both sides of the Atlantic. Simon Zadek, chief executive of AccountAbility, a British institute specializing in corporate reporting issues, said he had no problem with the board receiving donations from big companies, but added that it had failed to be sufficiently transparent. "The issue is not the pickle they are in now but where they are going to go," he said. "They [should] say immediately that they plan to publish all donations that have been made unless there are legal reasons why they can't."

The IASB’s donations are overseen by a foundation chaired by former U.S. Federal Reserve Chairman Paul Volcker, who is also heading Andersen’s oversight board.

Sen. Levin is chairman of the U.S. Senate's permanent subcommittee on investigations. He is also co-sponsor of the recently introduced bill on Ending the Double Standard for Stock Options Act (S. 1940). This proposed legislation aims to plug a corporate tax loophole that allows companies to deduct multi-million dollar pay from their income taxes but not show it as an expense on their earnings statements.

-Rosemary Schlank

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

WHAT KIND OF FIRM ARE YOU?
As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.