The organization that has authority to appoint members to the International Accounting Standards Board, and approve the standard-setter’s budget, has named Gerrit Zalm its new chairman. Zalm, the former Deputy Prime Minister and Finance Minister of the Netherlands, will begin his three-year term at the International Accounting Standards Committee Foundation January 1, 2008.
He will replace Philip Laskawy, the retired chairman of Ernst & Young International, whose IASC Foundation term expires at the end of this year.
Zalm, a leading advocate for the adoption of International Financial Reporting Standards by European Union member countries, served four Dutch governments spanning the years 1994 to 2007. Most recently, he was deputy prime minister of the Netherlands from 2003 through 2007. He is also the nation’s longest-serving minister of finance, holding that position for 12 years.
The primary mission of the IASC Foundation is to oversee the development of a single set of global accounting standards, and one of the most daunting tasks the organization will face during Zalm’s term is the convergence of IFRS and U.S. generally accepted accounting principles, a cross-continent project being spearheaded by the IASB and FASB. “There is a growing acceptance of the need for international accounting standards as the basis of financial reporting for the world’s rapidly integrating capital markets. It is the role of the Trustees to help ensure that progress continues on a worldwide basis,” noted Zalm in a statement.
It’s likely that new IASC Foundation chairman Gerrit Zalm will kick-off his three-year term by pressing for a single European accounting standard first, followed by a global standard soon after.
Despite Zalm’s confidence in the Foundation, he is less certain about the cooperation it will receive from accounting groups across Europe. Earlier this month, Zalm told the Financial Times that if Europe continues to demand exceptions to international standards, other countries could do the same, creating a domino effect that could unravel the move to universal IFRS. “One of my first priorities will be no new carve-outs in Europe and trying to get rid of the existing carve-out, because if Europe is doing this, other countries could get the same inspiration and then all the advantages of the one program fade away,” Zalm told the FT.
Regulators in the U.S. are also trained on IFRS. For example, the Securities and Exchange Commission is collecting public comment on two proposals it has floated among constituents. One aims to speed up convergence between U.S. GAAP and IFRS, the other proposes that companies based in the U.S. be given a choice between IFRS and GAAP for filing financial results with the SEC.
Meanwhile, IASB chairman David Tweedie and FASB chairman Robert Herz have publicly opposed the SEC’s push to accelerate convergence of the standards. While testifying at a Senate hearing in Washington, D.C., on Wednesday, Tweedie and Herz commented that the U.S. regulator should let the accounting standard-setters finish improving and aligning the rules before allowing the current version of IFRS to be used in financial statements that are filed with the SEC.
Zalm declined to comment to CFO.com about the convergence controversy, or about other potential accounting hot buttons, until he takes office.
Based in London, the IASC Foundation acts in a role similar to that of the Financial Accounting Foundation in the United States. The Connecticut-based FAF makes appointments to the seven-member Financial Accounting Standards Board, and oversees the standard-setter’s budget with input from the U.S. Securities and Exchange Commission.
The IASC Foundation has 22 trustees with a five-person executive committee. In addition to Zalm, the executive committee includes Bertrand Collomb, chairman of Lafarge; Richard Humphry, former managing director of the Australian Stock Exchange; Bryan Nicholson, former chairman of the Financial Reporting Council, the UK’s accounting regulator; and Antonio Vegezzi, retired vice chairman of Capital International.
Foundation trustees include David Sidwell, CFO of Morgan Stanley, Jean-Claude Trichet, president of the European Central Bank, Robert Zoellick, president of the World Bank, Jane Diplock, chairman of the executive committee of the International Organization of Securities Commissions, Haruhiko Kuroda, president of the Asian Development Bank, and Paul Volcker, former chairman of the IASC Foundation and former chairman of the U.S. Securities and Exchange Commission.
Since leaving the Dutch government in February 2007, Zalm has accepted several advisory positions for private-sector companies. For example, he is currently chief economist for DSB Bank, a consultant to PricewaterhouseCoopers in the Netherlands, and adviser to private-equity fund Permira.