IASB chairman-elect announced
Hans Hoogervorst: the former Dutch finance minister has been named as the man who will succeed Sir David Tweedie at the helm of the IASB, next year. There was the simultaneous appointment of Ian Mackintosh, longtime helmsman of the UK’s ASB and an accounting standards- setter with enviable professional credentials, in the supporting role as IASB vice-chairman. There had been reports in the press that finding a successor for Sir David was proving more difficult than expected, and in the end the search had to be extended beyond the accountancy profession. But just UK Labour politician, Alan Johnson, was unphased by being appointed shadow chancellor in the UK despite not knowing economics, so Hans is confident of his ability to deal with his lack of an accounting qualification. As head of the Dutch financial markets regulator, he will be relying on his high- level financial experience gained in that arena. He adds that he was also the first Dutch health minister not to have a medical background, which did not hamper him. Asked by the FT whether the US would adopt IFRS,
reportedly he replied, “I think so.” However, he declined to say what might happen if it did not, arguing that he refused to think about that particular scenario.
Despite the obvious worry that he may be influenced by the EU, who bankroll a large part of IASB’s budget, he stresses that the standards should be drawn up independently from politicians, a principle that has not always survived government pressure in the past. “Why I think I could be effective in this job is that I know what it is to be diplomatic but I know also what it is to be determined,” he said. Nevertheless, the fact remains that the appointment is ever-so slightly controversial, one that some might see
as politically motivated, and others might feel as reflecting on the accounting profession. After all, the job description as posted on the IFRS website stated it was looking for “A high degree of technical accounting expertise” and “All members of the IASB, regardless of whether they are from the accounting profession, preparers, users or academics, should have demonstrated a high level of knowledge and technical competency in financial accounting and reporting.”
Never mind, experts on tap, and not on top, as they say, as long as he sees the folly of the current lease accounting exposure draft. And perhaps it is impossible to find a senior qualified accountant with political skills, and powers of persuasion? As it is, the accounting profession is under pressure from a report published by the FSA suggesting that they may need to change their thinking. In its discussion paper, Enhancing the Auditor’s Contribution to Prudential Regulation, the FSA proposes a shake-up of the UK auditing profession. In the FSA’s view, UK auditors displayed a worrying lack of scepticism in their auditing of some of the accounts of financial institutions, especially related to complex financial products that critics blame for exacerbating the financial boom and then deepening the market turmoil.
At the same time the Bank of England in its most recent financial stability report, called for the industry to clarify window dressing to show lower leverage at the end of each reporting period. Calculations by the bank for UK banks show liabilities regularly dropping just in time for half and full-year reporting. “This can lead to a lack of confidence in institutions’ balance sheet disclosures,” said the bank, with typical understatement.
Due diligence essential in the SME market
Stephen Bassett, from Arkle Finance, a specialist lessor who access the UK’s SME market solely through the broker channel, says that in their sub-sector of the market, things are getting increasingly competitive. Whilst business levels are holding up for them, they are actually seeing new funders coming into their sector and some pre-existing competitors becoming more active once again.
Arkle’s sector could be described as off-prime where rate is not thought to be a particular issue, however the concern is that some funders may not be conducting sufficient due diligence in the examination of proposed deals, points like equipment pricing and content, risk and reward, alongside the normal credit issues. From Stephen’s long experience, he is convinced that the only safe way to operate in this arena is by taking a stringent
approach and paying close attention to the specifics of each and every application. With the support of its growing broker network, Arkle seeks to be a responsible lender, to know the customers they share with these professional brokers and to provide them with the most appropriate solutions and products.
If they are to stay around to serve their brokers in the long term, Stephen believes that Arkle’s new business take- on should be relatively paced, with both eyes firmly on the quality of the portfolio and the future profits it can generate, he repeats the currently popular industry expression, “really good business is hard found, hard fought, and hard won”; in doing this, Arkle are certainly not prepared to compromise too much on their established underwriting methods in order to pursue short-term growth, as they believe it would end in tears.
Business Money November/December 2010 67
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