Former Securities and Exchange Commission chief accountant Lynn Turner says accounting standards-setters “deserve an F” for allowing companies to incorrectly move assets off their balance sheets and for caving in to political pressure to alter rules.

Speaking at a panel discussion in New York this morning hosted by Pace University’s Lubin School of Business, Turner disputed a suggestion from moderator Floyd Norris of The New York Times that the accounting profession should shoulder part of the blame for the financial crisis. Instead, he criticized the Financial Accounting Standards Board for writing rules enabling companies to inappropriately dump securitized assets into qualified special-purpose entities.

Actually, Turner said he gives credit to “practicing accountants” — financial-statement preparers and auditors — for overseeing a dramatic falloff in financial fraud cases compared to the years immediately following the Enron and WorldCom scandals. “There’s a change from 10 years ago, and accountants do deserve some credit,” he said. “Certainly some of the audit firms get a lot of credit for what they’ve done in standing behind fair value and trying to get the numbers right.”

He had no such praise for FASB. Although the board is currently rewriting FAS 140 to eliminate QSPEs, it has “done an absolutely miserable, abysmal job, especially in the balance sheet area.”

The other panelist, Conrad Hewitt, the SEC’s immediate past chief accountant, gave the accounting profession a pass as well. He assigned blame for the financial meltdown to the greed of mortgage companies and brokers, as well as banking regulators for poorly scrutinizing banks with numerous off-balance-sheet entities. “I never did like off-balance-sheet items,” he said. “You own something or you don’t.”

There was markedly less harmony between the two panelists when it came to International Financial Reporting Standards. Hewitt said there’s no doubt that creating a single worldwide set of accounting rules is the correct thing to do. It reflects the reality that nations depend on one another for imports and exports, and that U.S. companies would have greater access to overseas capital.

Turner, though, cuffed the International Accounting Standards Board for bowing to pressure from France president Nicolas Sarkozy and other European Union leaders to relax fair-value accounting rules. Since last October, IASB has come under fire for sidestepping due process to rush out a rule allowing financial institutions to reclassify some loans as a way of avoiding marking those assets to market and avoid losses generated by a drop in asset value.

“IASB has not shown that it can develop high-quality standards without political interference,” Turner said. “Until it can, IFRS is not ready for prime time.”

Turner indicated that even then he would not support IFRS for U.S. companies, rejecting Hewitt’s notion that the nature of international business today demands it. In fact, IFRS would make American companies less competitive, he insisted.

“If we make our markets look like everyone else’s, and they’re only as transparent as everyone else’s, there’s no reason for [investors] to allocate their money to U.S. markets,” he said. “But if our markets have, as they always have had, greater transparency, and investors get the information to make better decisions, then there is a reason.”

Drawing an analogy to U.S. automakers, he went on, “If your product doesn’t turn out better than the next guy’s product, just like GM or Ford or Chrysler, you don’t end up being one of the winners.”

For his part, Hewitt pointed out that the SEC commissioners voted 5-0 last August to move forward with a plan to eventually make IFRS mandatory for U.S. public companies — and that four of those five remain on the commission today.

The single new commissioner, though, is Mary Schapiro, the commission’s new chair. At her Senate confirmation hearings, she testified that she has concerns about the pace of the IFRS timeline, the independence of IASB, and the quality of the standards themselves. IFRS is not as detailed as U.S. generally accepted accounting principles and gives more room for interpretation, she said.