Corporate Irresponsibility
TJN and the Association for Accountancy and Business Affairs (AABA) have nominated the International Accounting Standards Board (IASB) for the Public Eye Award for corporate irresponsibility. It will be presented in January 2008. You would think that a body that rules on accounting standards around the world -- which have an enormous, if hidden, impact on the extent to which capitalism can be harnessed for the good of ordinary people -- would be funded by, and subject to the will of, democratically-elected bodies. You would be wrong, as an excerpt from our nomination shows.
All over the world, public regulation is moving away from public bodies and elected governments and towards private and unaccountable cartels. An example of this is the International Accounting Standards Board (IASB). This body formulates rules for accounting by companies which have the force of law but does not owe a ‘duty of care’ to anyone.
The IASB is a private organisation. It is registered in the US state of Delaware, which is well known for secrecy. It is funded by major corporations and the Big Four accounting firms. These firms and companies control all its thinking and processes. The IASB has obtained control of accounting standard setting throughout the EU and much of the world except for the USA.
The control of accounting rulemaking is very important. The IASB accounting standards affect the distribution of income, wages, dividends, wealth, risks, taxes and social welfare. The IASB standards function in a law-like manner and can be used by the courts to adjudicate claims of improper corporate and executive behaviour. Despite this the IASB is not accountable to any democratically-elected parliament. Its members are not elected by stakeholders or any representative organisations. Neither is their suitability scrutinised by parliamentary committees.
TJN and AABA have much better proposals, both for country-by-country reporting, and for unitary taxation. A fight is currently underway to resist the IASB's attempts to enforce its latest accounting standards. These matters may look, to a non-expert observer, as if they are arcane and distant from the concerns of ordinary citizens. Appearances can be deceptive. As TJN's Richard Murphy says, "accountants now have the opportunity to deliver more value for development than just about any other group in society." He is an accountant, so perhaps he would say that. But of the enormous importance of these issues, and of the utterly crucial role that accountants can play, there is absolutely no doubt.
All over the world, public regulation is moving away from public bodies and elected governments and towards private and unaccountable cartels. An example of this is the International Accounting Standards Board (IASB). This body formulates rules for accounting by companies which have the force of law but does not owe a ‘duty of care’ to anyone.
The IASB is a private organisation. It is registered in the US state of Delaware, which is well known for secrecy. It is funded by major corporations and the Big Four accounting firms. These firms and companies control all its thinking and processes. The IASB has obtained control of accounting standard setting throughout the EU and much of the world except for the USA.
The control of accounting rulemaking is very important. The IASB accounting standards affect the distribution of income, wages, dividends, wealth, risks, taxes and social welfare. The IASB standards function in a law-like manner and can be used by the courts to adjudicate claims of improper corporate and executive behaviour. Despite this the IASB is not accountable to any democratically-elected parliament. Its members are not elected by stakeholders or any representative organisations. Neither is their suitability scrutinised by parliamentary committees.
TJN and AABA have much better proposals, both for country-by-country reporting, and for unitary taxation. A fight is currently underway to resist the IASB's attempts to enforce its latest accounting standards. These matters may look, to a non-expert observer, as if they are arcane and distant from the concerns of ordinary citizens. Appearances can be deceptive. As TJN's Richard Murphy says, "accountants now have the opportunity to deliver more value for development than just about any other group in society." He is an accountant, so perhaps he would say that. But of the enormous importance of these issues, and of the utterly crucial role that accountants can play, there is absolutely no doubt.
posted by TJN at 2:18 am
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