In December, the parent organization of the U.S. Financial Accounting Standards Board announced its plans to shrink the standard-setting body from seven to five members to make the group, among other things, more "nimble."
"I have no damn idea what 'nimble' means," quipped IASB member James Leisenring, yesterday while speaking at a conference in New York, sponsored by Ernst & Young. He noted that FASB's overseas counterpart, the International Accounting Standards Board, was doing the opposite, and expanding its membership from 11 to at least 14 and maybe 16. "I don't agree with either [decision]," added Leisenring, who wryly pointed out that if it was up to the European community, IASB would be made up of "25 people, all part-time, all preparers."
A former FASB member, the outspoken Leisering continued that IASB comprises two part-time board positions to inject "real world" experience into the standard-setting process. He then promptly admitted that currently, at least one of those part-timers was an academic.
After sounding off about the structural faults of the two boards, the straight-talking Leisenring also said he didn't have "the faintest idea" what people meant when they mislabel U.S. GAAP and international financial reporting standards as rules-based and principles-based, respectively. Both sets of standards are based on principles, with the fundamental difference being that U.S. rules have more guidance attached to the principles, he asserted.
Yet, he said the rules vs principles debate pales in comparison with the real problem related to the convergence of American and international accounting standards: "The world is scared to death" of being regulated by the U.S. Securities and Exchange Commission. "They are afraid of the beast in Washington [and the heightened level] of scrutiny" that SEC oversight represents. That's one of the main sticking points with convergence, mused the standard-setter, who has seen accounting from both sides now.
|
Video
