Today, on the eve of the G-20 summit, Robert E. Denham, Chairman of the Financial Accounting Foundation (FAF), the independent oversight body of the U.S. Financial Accounting Standards Board (FASB) issued a letter to President Bush, to be circulated to participants attending the summit, reiterating substantially the same sentiments as those expressed in the letter the President received earlier this week from Gerrit Zalm, Chairman of the Trustees of the IASC Foundation, the oversight body for the International Accounting Standards Board (IASB).
The FASB letter cautions that, while issues related to international accounting standards will be discussed at the G20 summit, member countries should refrain from further political interference in the accounting standards-setting process. The letter emphasizes the importance of maintaining “the integrity and independence of the accounting standard-setting process,” which, in the view of FASB, has already been threatened by interference from the European Commission in the case of IASB and by the SEC in the case of FASB.
In the context of the present market crisis, some U.S. and European policy-makers are calling for the revision of the treatment fair value accounting under both IASB and FASB issued accounting standards. Fair value accounting or mark-to- market accounting has been attributed a role in the current market’s demise. The letter stressed, however, that, “any legislative outcome that would permit accounting standards to be overturned through a political process will create uncertainty, greatly undermine investor confidence, and dangerously compromise the credibility of financial reporting at a time when capital markets are under great duress and in need of greater transparency.”
Also today the IASB and FASB hosted the first of three public roundtables in London, in connection with which they announced that Hans Hoogervorst, Chairman of the Netherlands Authority for the Financial Markets, the Dutch securities regulatory agency, and Harvey Goldschmid, former Commissioner of the Securities and Exchange Commission, will co-chair a “high-level advisory group formed to consider financial reporting issues arising from the global economic crisis.” Recommendations from the advisory group will then be presented for consideration by IASB and FASB. The advisory group will consist of “investors, regulators, preparers, auditors and other users of financial statements and will help to ensure that financial reporting issues arising from the crisis are considered in an internationally co-ordinated manner.” The advisory group’s study is expected to be completed within four to six months. Subsequent roundtables will be held in Norwalk, Connecticut on November 25, 2008 and in Tokyo on December 3, 2008.