Accounting reforms row mangles UK industry

Industry news roundup: week ended 17 Oct 2013:

There seems to be no end to the row caused between the Government and accounting reforms, heedless of the injury it’s causing the industry at large.

First up, did you hear how the Government has decided not to move forward with new reforms that would have brought the UK into step with what will most likely be new EU accounting rules? It’s true – high-powered British firms will not be required to change their book-keepers on a five-year timetable, despite the fact that the writing is on the wall in the EU that such a reform will soon go into place across the eurozone.

The impetus behind the proposed-and-now-defunct reforms was how the credit crisis emerged seemingly out of nowhere, instigated by supposedly perfectly financially healthy big businesses. Accountancy experts have been examining the role that auditors might have played in this by perhaps rubber-stamping the financial health of many of these firms just prior to the spate of taxpayer bailouts that characterised the economic downturn, and the reform were designed to shake up the status quo and perhaps avoid a repeat performance in the future.

So apparently the Government in its inimitable wisdom has decided not to go forward with such a safeguard in the future, apparently because hey one credit crunch wasn’t bad enough, right? For what it’s worth I think this is completely wrongheaded, especially in light of how the EU will most likely adopt similar measures in the coming months. What makes UK firms so special that they can’t be held to the same standards as the rest of the eurozone? Oh I know – it’s because they’ve got Parliament in their back pockets.

Still, Parliament has offered a symbolic olive branch to those of us who want to seem ore regulation in the sector, though there’s not much in the way of strength in the move. In fact, Westminster has fobbed off the responsibility onto the International Accounting Standards Board instead, as another news story this week broke about how the Government wants the IASB to enforce an increased level of ‘prudence’ in its accountants when it comes to examining banks and their financial affairs.

The IASB is absolutely up in arms at the suggestion, as it threatens their sovereignty to be more or less told what to do by the Government. It’s one thing to work together with ministers to combat bad behaviour on the part of banks and businesses, but it’s another thing altogether to be expressly told what to do – it’s not like the IASB is operated by the public sector, you know!

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