International Accounting Standards Board Chairman Sir David Tweedie said he nearly resigned before giving in to pressure from European regulators to modify fair value accounting standards to allow banks to reclassify their assets.
The European Union had threatened to carve out an exception to the standards unless the IASB agreed to the changes, and Tweedie feared that the carve-out could derail efforts to converge accounting standards internationally. Amendments to International Accounting Standard 39 last month have allowed financial institutions such as Deutsche Bank, HSBC and the Royal Bank of Scotland to significantly boost their stated pre-tax profits by avoiding the need to use mark-to-market accounting for some of their financial derivatives.
Tweedie (pictured) admitted that he had considered resigning, but that he was more committed to achieving convergence around International Financial Reporting Standards by the U.S. and other countries.
"If the EU had done another carve-out, then the U.S. would have said this is impossible," he said at a U.K. House of Commons Treasury committee meeting, according to Accountancy Age. "That would have crippled the whole global process. The European Commission said that the legislation to implement the carve-out was all ready to go."
However, the IASB was accused of "caving in" and acting "spineless" in a series of harsh questions from members of the Treasury committee. "It is extremely damaging if in effect standards are made by politicians for political reasons," said Financial Reporting Council chief executive Paul Boyle, according to the Press Association.
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