Accounting standards ‘must be immune to political meddling’

Date: 17/10/02

By Peter Chapman

EUROPE'S leading accountants have issued a 'hands-off' warning to politicians as they prepare to adopt a raft of international standards that listed firms will have to use from 2005.

Under an EU regulation adopted earlier this year, companies will have to conform to rules set by the London-based International Accounting Standards Board (IASB).

The EU favours their standards rather than US rules known as Generally Accepted Accounting Principles (GAAP), which have been blamed as a factor in the collapse of Enron and its auditor Arthur Andersen.

But the accounting profession insists the EU's standards must be immune from political interference.

Peter Wyman, president of Europe's biggest accounting body, the Institute of Chartered Accountants in England and Wales, said: 'It's the role of politicians to make sure that there is a proper process for the formulation of accounting standards, regulation and so on. The second the politicians move from that to meddling in the detail, you are lost,' he added.

Wyman, a partner at accounting giant PricewaterhouseCoopers, said the US set of standards had been a victim of corporate lobbying of politicians, who had influenced the end result. 'That is why they are not good enough.' His comments echoed the views of Sir David Tweedie, chairman of the IASB, in a speech at the European Parliament.

Meanwhile, US Securities and Exchange Commission chairman Harvey Pitt, in Brussels last week, said political neutrality would be a key issue when America decides whether to allow EU firms with listings on American markets to use international standards in the US.

That would save them millions of euro a year by ending the current requirement to adapt financial results to US accounting rules. Pitt - in charge of cleaning-up corporate America after the Enron collapse - said the EU must 'accept and defer to IASB pronouncements, even when doing so raises political hackles'.

Europe's leading accountants have issued a 'hands-off' warning to politicians as they prepare to adopt a raft of international standards that listed firms will have to use from 2005.