It’s already obvious that one item – the convergence of national accounting standards – is going to dominate the agenda of the Accounting Standards Board over the next few years. Mary Keegan, the incoming chairman of the Accounting Standards Board, knows this only too well. “I took the job because I am an ardent believer in the convergence of accounting standards to a global norm. Chairing the ASB gives me an opportunity to be part of that,” she says.
Taking on the chairmanship of the ASB at this time is a logical progression for Keegan because, as a technical partner with PricewaterhouseCoopers, she has been active on the issue for the past few years. As a result, she already knows that the UK is in a unique position. “From the UK perspective, we have a chance to drive the convergence and ensure that those standards are good,” she says.
Keegan also understands how much patience and determination it will take to make a contribution to this tortuous process. “Every time financial results are posted on the world wide web you are presenting figures to a world-wide audience,” she says. “For clarity you need to be able to use a common language, yet we are a long way from that.”
In the past, standard setting has seemed an Anglo-Saxon affair, represented over the past few years by the G4 grouping (US, Canada, UK, Australia and New Zealand, the G4’s fifth member). Keegan wants to create a more inclusive process that brings in accounting standard setter friends from continental Europe that she has made during her time with FEE, the European accounting organisation. And, diplomatically, she refuses to cast the European Commission as the major obstacle. “Europe is an unknown quantity and we are still waiting for the EC regulation to see what the mechanism might be,” she says.
All this talk of international standard setting can leave even the most internationally minded FD feeling a little left out, and, perhaps knowing this, Keegan makes clear her determination to keep consulting her wide network of contacts within UK business.
Of course, the international connections on Keegan’s CV must have been a big plus during the interview process, but it can’t have harmed her cause that she is a member of the technical committee of the Hundred Group of Finance Directors. Over the past few years, FDs have mainly been supportive of the work of the ASB, but that continuing support can’t be taken for granted. Keegan is realistic enough to know she is not likely to win universal approbation all of the time but even so, her close contact with the Hundred Group surely won’t do any harm when trying to keep relationships sweet.
This mostly good relationship with FDs has been built up at the same time that the ASB has adopted a stance of being tough on bad financial reporting and the causes of bad financial reporting, and Keegan says she won’t relax on that approach.
However, she also wishes to maintain the UK tradition of avoiding the US cook-book approach to writing accounting standards. “There are always going to be occasions when people are testing the boundaries, but we don’t want to be in a position where we have to redraw those boundaries. We don’t want more rules,” she says. “I would encourage the business and audit communities to ensure they police the existing boundaries.”
Nevertheless, Keegan argues that accounting rules and standards must change to keep pace with the way business is changing. She cites the issue of sorting out the principles – and the practicalities – of revenue recognition as one example of this.
Keegan says that she is taking over the chair of the ASB while the organisation is in a “position of strength”. But it is clear that the ASB could be undergoing radical change in the next year or so, particularly if the idea of charging it with the role of becoming the UK’s company law commission becomes a reality. In principle, Keegan says, she is keen on this idea, but it is clear that many of the practicalities have yet to be finalised.
But no matter how important the domestic scene, Keegan’s main focus is still likely to be the international agenda – and she has her work cut out. Last month, the GAAP 2000 survey of the differences between International Accounting Standards and the standards in 53 countries showed that the world is still a long way away from the kind of convergence that she has in mind. How quickly and how effectively that gap is closed will go a long way to determining her success as the ASB’s second chairman.
GAAP 2000 – A survey of national accounting rules in 53 countries, edited by Christopher Nobes, published by PricewaterhouseCoopers.
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