Drivel society
Posted by Christie Malry on November 5, 2010 at 9:58 am
The IASB wields a disproportionate level of power over a huge number of people around the world, yet is mostly funded by voluntary contributions from companies and accounting firms. It is no surprise that it considers these organisations to be its principle stakeholders, and looks after their interests first.
Around the table at the meeting, the board considered the costs and benefits of a country by country reporting standard entirely from the perspective of investors and companies. Many investors have made clear that this information would be useful to them, since much risk occurs at the level of the country in the form of political stability. And many companies have admitted that they collect the necessary information anyway, and it would not be too costly to compile it for a financial report.
Yet still it seems that unless the needs of government and civil society are considered by the IASB, a country by country reporting standard is unlikely. Political pressure is necessary to force the IASB to realise the values enshrined in its constitution and recognize governments and civil society as legitimate users of financial reports.
Awww, bless. The IASB didn't produce the answer they wanted, so it must clearly be evidence that they've been captured by their regulatees and that's why they made the decision they did. Rather than, say, the learned members of the IASB concluding that, based on the evidence presented, country by country reporting is a load of steaming Ritchiebollocks.
The point is, the IASB isn't stupid. They know that this is merely the thin end of the wedge and that once they've produced a limited amount of CBC information, the civil society groups will start pressing for more. This will most certainly happen if, as expected, the pressure groups find that they're unable to make much of the disclosures presented.
The reason the IASB considers standards from the perspective of investors and companies is that that is what their constitution requires them to do. It's right that political pressure could be brought to bear to amend their constitution, but any changes would be unfair on investors, who own the companies concerned, and companies, who must comply with the resulting standards or pay the penalty. If civil society wants to play this game, they could always start their own investment vehicles and use their purchasing power to deliver meaningful change in the companies in which they invest. Otherwise, they'll have to accept that investors simply don't want to see their money wasted on the insane, useless vanity projects of a bunch of left-wing pressure groups.
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