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EU body tells accounting rule setter to slow down

Published 03/29/2011, 10:22 AM
Updated 03/29/2011, 10:24 AM
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LONDON, March 29 (Reuters) - A global accounting rule setter is driving too fast in drafting standards and could damage financial stability, an official at the European Union's executive body said on Tuesday.

"A new big bang is coming up and we are extremely concerned," Jeroen Hooijer, a senior European Commission official told an accounting conference.

The International Accounting Standards Board (IASB), whose rules are used in over 100 countries, including the EU, wants to complete major changes by June as part of wider efforts to forge a common set of global accounting standards.

"Our worry is not that these new standards are coming. We are worried about the speed," Hooijer said.

The Commission plays a pivotal role in giving any rule change the green light for use across the 27-country bloc.

Hooijer said the EU executive is worried there is not enough time for users to get ready or opportunities to "field test".

He said world leaders have extended the deadline for convergence from June to the end of this year and likened the IASB to a sports car driving at 160 kilometres an hour to the south of France.

"We would like to slow down to 120. We don't want to stop it. If you drive to the south of France and you only arrive half an hour later, the risk of an accident is 70 percent lower," Hooijer said.

The IASB has been working with its U.S. counterpart, the Financial Accounting Standards Board (FASB) for over five years on converging rules.

IASB Chairman David Tweedie said last month that June remains the goal for completion but "we will not sacrifice quality in the process".

The IASB hopes that completion of convergence will spur the United States this year to say clearly it will now adopt IASB rules to make them truly global.

Hooijer reiterated concerns expressed by his boss, EU Financial Services Commissioner, Michel Barnier.

"As Barnier spoke last month, we are confident our American friends will go ahead but there is a limit to our patience," Hooijer said.

An official at the U.S. Securities and Exchange Commission, spoke earlier this year of possible "condorsement" -- a mix of convergence and endorsement -- rather than clear adoption.

"Condorsement is not a nice word. What will be endorsed and what to be converged?" Hooijer said. (Reporting by Huw Jones; Editing by Jon Loades-Carter)

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