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IFRS slides on reporting standards

11th Feb 2014 | The International Financial Reporting Standards Foundation (IFRS) whose core function is based on setting "high quality, understandable, enforceable and globally accepted" financial reporting rules has been filing inaccurate and late returns at Companies House the Daily Telegraph reports

The watchdog for global accounting standards is required under the UK Companies Act of 2006 to notify Companies house within 21 days of appointment or termination of directors.  According to the Telegraph:

 

Paul Volcker, the heavyweight American economist, stepped down as chairman of the IFRS Foundation trustees on December 31, 2005. But the IFRS foundation did not notify Companies House until seven years later, on August 9, 2012.

 

Tommaso Padoa-Schioppa was appointed chairman of the IFRS Foundation trustees in January 2006, but stepped down when he became Italy’s finance minister in May 2006.

 

Mr Padoa-Schioppa, who is considered one of the founding fathers of the European single currency, died in December 2010. But IFRS Foundation filings at Companies House say that he was appointed to its board nearly two years later, on September 5, 2012. The termination of his appointment was not registered until February 8, 2013.

 

Meanwhile, Mr Padoa-Schioppa’s replacement, Philip Laskawy, a former chief executive of Ernst & Young, is not recorded as either arriving at or leaving the foundation. Similarly, Gerrit Zalm, former finance minister of the Netherlands, was chairman of the foundation trustees from October 2007, but Companies House has never been notified.

 

The apparent disarray in the foundation’s filings dates back over 10 years. At Companies House, the foundation’s headquarters is listed in Wilmington, Delaware. But, to comply with UK company law, it nominated a director, Kurt Ramin, and his private flat in Wapping, East London, for the official receipt of documents.

An IFRS spokesman is quoted as advising that the foundation changed the nominated person soon afterwards and its business address to its offices at 30 Cannon Street in the Square Mile. IFRS accounting standards are facing increased scrutiny from a variety of quarters since the global financial crisis. Politicians, institutional investors and governance groups have pointed to the new rules, introduced UK in 2005, as contributing to the growth of systemic risk within banking and the international financial system.

 

A year ago, the Bank of England blamed accounting rules for a £50bn black hole in British banks.

European politicians are due to vote on around €60m (£50m) of funding for the International Accounting Standards Board (IASB), the standard-setting body of the foundation responsible for the IFRS rules. MEPs have threatened to withdraw funding unless the IASB bows to investor demands to overhaul its accounting standards.

 

The MEPs want the IFRS rules overhauled so that company accounts reflect “economic facts rather than concepts”.

Rather than paying out six years of funding at once, the MEPs want to “conduct annually an assessment of whether these criteria are fulfilled” and release the cash in tranches.

 

The MEPs’ demands represent a major breakthrough for investors who have been fighting to restore the principle of “prudence” in international accounting rules according to the report.

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