Accountancy Age

On the plus side it appeared to fully endorse a single set of global standards, perhaps clearing the way for the US financial watchdog to back international accounting standards at last.

But it also stated the need for the standard setter to promote ‘financial stability’. But G20 seems to want stability recognised through the ‘governance’ surrounding standard setting and not through the standards themselves – a situation that would have been near impossible.

The outcome looks like typical politicial compromise. It was clear before the event that the French wanted stability to be a central part of standard setting, which the International Accounting Standard Board would not have accepted. Rejecting it would have given certain governments the opportunity to declare the IASB as no longer relevant and go off looking for their more favoured standard setting solution.

In many senses then, G20 can be read as the battle for IASB independence. It was one joined by the chairman of the board’s parent body in advance when he pleaded with the heads of state to protect the IASB’s ability to stand alone unfettered by the views of national governments.

But there is, on our reading of the G20 communiqué, still room to attack fair value through the work that will take place on mitigating ‘pro-cyclicality’ of the world economy. Fair value has been accused of promoting just that.

There are three months before the next G20 and the devil will surely be in the detail for answers to all five key areas of reform. Those who support the IASB and fair value will have to remain on their guard.

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