Christopher Fildes on international accounting standards
How gratifying. One set of rules for the whole world, and all of them springing from a fountainhead in Cannon Street, London EC4. There will have been no such display of global authority since the sun set on the British empire. Washington is warming to it. Brussels is restive.
These are the rules that set the standards for companies reporting on their financial affairs to their shareholders. They come from the International Accounting Standards Board, and they are accepted in more and more centres where shares are traded, from London to Beijing. The world’s biggest economy is the outstanding exception, but now the Americans are nerving themselves to fold their own ‘Generally Accepted Accounting Principles’ into the IASB’s.
All this is something of a posthumous triumph for Sir Henry Benson, the formidable City accountant (later ennobled) who called the IASB into existence a generation ago. By setting it going before the legislators and regulators could think of this as something else for them to do, he secured its independence. This is the quality singled out for praise the other day by Christopher Cox, who presides over its only competitor.
Mr Cox is chairman of the Securities and Exchange Commission, which is an agency of the United States government and has the American GAAP rules as a part of its remit. If the IASB’s members represented specific national interests or political constituencies, he said, this would undermine the confidence of investors and users in the way it sets its standards. Now, as they gain acceptance around the world, Mr Cox asks: will they give the world a single set of standards? He is sure that this would be welcome, and the only remaining question to his mind is how quickly it could happen.