IASB/NAPF standards spat

Speaking at the National Association of Pension Funds (NAPF) Investment Conference, Stephen Cooper, a member of the IASB, said the review was necessary to take in the wide range of opposing views to the current FRS 17/ IAS 19 regime.

Cooper’s announcement was prompted by the revelation that the NAPF would be holding its own summit to coordinate ideas on how to review accounting standards.

Speaking prior to Cooper, Lindsay Tomlinson, chairman of the NAPF, argued that one of the key conclusions from the credit crunch was that markets were not efficient and mark-to-market calculations of pension liabilities were therefore unsound.

Tomlinson also argued that FRS 17 encouraged schemes to dump equities in favour of corporate bonds, in a way that was detrimental to the economy.

Quoting economist John Maynard Keynes, Tomlinson threw down the gauntlet to the IASB, stating: “When the facts change, I change my mind.”

Cooper answered that it was all very well suggesting what was wrong with the current standards, but anyone who did so should also be able to state what the alternative method of calculation should be.

Stephen Hadrill, director general of the Financial Reporting Council, also spoke at the debate, agreeing with several of Tomlinson’s points.

“Accounting standards should give confidence to investors, but not undermine equity markets,” he said.

Joanne Segars, chief executive of the NAPF and the session’s chair, questioned why standards were created so far from the political process.

While Cooper said he was uneasy with political interference in the setting of

accounting standards, Hadrill answered that it was important that politicians play a greater role in the consultations for creating new accounting standards.

Tomlinson discusses his views at tinyurl.com/NAPF-IASB.