Advocate wants just one way of bean-counting

By PAULA OLIVER

Adopting international accounting standards will make New Zealand a more attractive destination for foreign investment, says the man who has been given the task of harmonising the world's accountancy rulebook.

Sir David Tweedie, the chairman of the London-based International Accounting Standards Board, is in New Zealand for a flying visit to talk about the progress being made in adopting a single global set of standards.

Sir David also has a meeting scheduled with the Minister of Commerce, Margaret Wilson.

Speaking to the Business Herald in Wellington yesterday, Sir David said that efforts to bring standards into line would have a positive economic spin-off for all those who got involved.

"In Europe at present there are 15 countries which have 16 possible ways of accounting.

"Plus there's 10 new countries joining next month, so that's 26 different ways of accounting.

"It makes sense to do this."

European Union countries have agreed to adopt the new set of standards from next year.

In New Zealand companies have until 2007 - although they can choose to go with the new standard earlier if they wish.

Sir David said the benefit for New Zealand would come when foreigners wanted to invest in this country.

"They won't have to get a whole book of New Zealand standards out and wonder what it all means.

"A risk will be gone. That's why it's so important.

"We're actually talking not about accounting, but about world trade and growth."

However, convincing the world of the upside has so for proven to be anything but an easy task.

Since being formed in 2001 the international board charged with developing the single set of high quality and enforceable global accounting standards has seen political interference and some resistance to its work.

France's President Jacques Chirac wrote to the European Commission last year to voice strong opposition to the adoption of the global standards - an unusual occurrence in the world of accounting.

There is also the job of dealing with the other big standard set in the world, the American one.

The United States agreed about 18 months ago to look at the differences between its own standards and the new international set that are likely to be in force in more than 90 countries next year.

Sir David said that at the moment two staff were literally putting the two standards side by side and agreeing which was the better one.

"Then they turn to the board who has the weaker standard and tell them they should switch.

"The idea is that by about 2007 we will get the two more or less meshed together."

Abandoning the need for multinationals operating in the US to convert their accounts to the American set of standards was not the solution for many reasons - not the least political ones.

"To just remove it would be a major political decision for them because some of the American companies would resent it.

"Whereas if there aren't any differences, then that requirement just vanishes. That's what the target is."

Sir David said that those working to bring together the international and American standards had turned to New Zealand in at least one instance, as they went about searching the world for the best possible standard.