March 2001

G4+1 Disbands, IASC Trustees Announce New International Accounting Standards Board

Given the role that the new International Accounting Standards Board (IASB) will soon play, the G4+1, an informal but influential group of accounting standards setters from Australia,Canada, New Zealand, the United Kingdom, the United States, and the International Accounting Standards Committee (IASC), decided to officially disband during a London meeting held the last week of January.

The group agreed that a restructured IASC was sufficient to include an active partnership with national standard setters, making the G4+1’s work redundant.

“[C]ontinuing the activities of the G4+1 might divert resources that otherwise could be used to support the IASB’s efforts to achieve convergence of standards worldwide,” a recent communiqué stated.

Just days before the G4+1 decision to disband, the trustees of the IASC announced their appointment of the IASB. The board members, chosen for their technical expertise and professional experience, are charged with developing and approving a single set of high-quality accounting standards for international use.

“The trustees were extremely pleased with the exceptional quality of candidates and believe that the board truly reflects the best in the field,” IASC Chairman Paul A. Volcker said. “This group is exceptionally well qualified to ensure we reach the goal of globally accepted standards. The result should bring highly significant economic benefits to both the developed and emerging economies.”

The IASC, a 19-member oversight body representing six continents and 14 countries, was restructured over the past year to provide for a separation of duties between the newly instituted board of trustees and the IASB. The board of trustees is responsible for IASB appointments and IASC oversight and fundraising, while the IASB is responsible for setting accounting standards. The IASB will work closely with national standard setters and the IASC Standards Advisory Council, which has yet to be appointed. (For in-depth coverage of the IASC restructuring, see the January 2000 CPA Journal.)

According to Volcker, the trustees reached a unanimous decision after reviewing more than 200 candidates for the 14 board positions. Full-time members include the chairman, vice chairman, and seven liaisons to national standard setters. Sir David Tweedie, 1999–2000 chairman of the U.K. Accounting Standards Board, was appointed chairman of the IASB in June 2000, and Thomas E. Jones, former principal financial officer of Citicorp and former chairman of the IASC Board, was appointed vice chairman.

National liaisons are Hans-Georg Bruns (Germany), who has served as the chief accounting officer for DaimlerChrysler; Gilbert Gélard (France), a partner of KPMG in France; James J. Leisenring (United States), director of international activities for FASB; Warren McGregor (Australia and New Zealand), cofounder of Stevenson McGregor in Australia; Patricia O’Malley (Canada), chair of the Accounting Standards Board of Canada; Geoffrey Whittington (United Kingdom), the PricewaterhouseCoopers Professor of Financial Accounting at Cambridge University; and Tatsumi Yamada (Japan), a partner at ChuoAoyama Audit Corporation (a member firm of PricewaterhouseCoopers) in Tokyo.

Other full-time members are Anthony T. Cope, a member of FASB; Robert P. Garnett, executive vice president of finance for Anglo American plc, a South African company; and Harry K. Schmid, senior vice president of Nestlé responsible for corporate reporting. Part-time members are Mary E. Barth, a professor of accounting at the Graduate School of Business at Stanford University, and Robert H. Herz, a partner at PricewaterhouseCoopers in charge of technical and professional matters in the United States and the Americas.

Former SEC Chairman Arthur Levitt released a statement Jan. 25 in support of the new board members.

“I commend the IASC trustees for selecting this group of most capable and experienced individuals to be the first members of the new IASC board,” Levitt stated, characterizing the board’s responsibility to the public as “enormous.” “It is up to them, working in cooperation with our U.S. Financial Accounting Standards Board and other accounting standards setters, to create global accounting standards that will support effectively the imperatives of a global marketplace.”

An editorial in the Jan. 26 Financial Times (London) pointed out that 10 of the 14 IASB members are from English-speaking countries, with five of those members from the United States. The IASC restructuring required that the board’s membership be based on technical expertise rather than geographic representation, resulting in a board that is free from domination by any particular regional interest.

IASB Chairman Tweedie appears prepared for the task at hand: “The mission of the newly created IASB is simple. In partnership with national standard setters, we will aim to increase the transparency of financial reporting by achieving a single, global method of accounting for transactions—whether in Stuttgart, Sydney, Seattle, or Singapore. The potential benefit to the world economy by removing barriers to investment through applying uniform, high-quality standards is enormous.