Accounts of battle divide protagonists - Business - News - The Independent

Accounts of battle divide protagonists

AS BATTLES of words go, it is not that violent. The two protagonists - both Scots - claim to be chums with a shared love of under-performing football teams. And yet for much of the past decade Sir David Tweedie, chairman of the Accounting Standards Board, and Ron Paterson, senior technical partner at the accountancy firm Ernst & Young, have been sniping at each other.

To the outsider, the debate that has erupted again with the publication of the ASB's latest draft statement of principles looks somewhat arid. The two disagree on the accountancy treatment of assets and liabilities. In fact, though, as one seasoned observer has said, "this is fairly fundamental". Sir David believes that informing investors of what is really going on requires reporting assets and liabilities in accounts so that they reflect transactions, while Mr Paterson takes what is commonly termed a prudent approach and advocates matching by means of provisions, with the intention of smoothing results out over the years.

The problem for Mr Paterson is that Sir David came into his post on a reforming ticket. The ASB was launched in 1990 because its predecessor, the Accounting Standards Committee, was felt to have been undermined by all the financial engineering that contributed to the spectacular collapses at the end of the 1980s. Moreover, the chairman has a better way with words than most accountants - he terms those who want to put money aside in case they decide to carry out a restructuring advocates of "psychoanalytical accounting" - and his pronouncements tend to have the ring of common-sense to them. Accordingly, most leading accounting firms have fallen into line.

However, when the first attempt at a draft statement of principles was published three years ago, it was not only Mr Paterson and his colleagues at Ernst & Young who were upset. The draft issued in November 1995 attracted more letters of comment than any other document the ASB has published.

Although it has been three years coming, the latest version is really a clarification exercise. To aid with this, the ASB has brought out a question and answer booklet. Predictably, Mr Paterson is not impressed. "It looks like the other stuff twiddled around a bit," he said last week, adding that it was "an odd mixture" of self-evident truths and obscure arguments.

However, he seems to have lost some of his enthusiasm for the fight. While describing the explanatory booklet as "disingenuous," he conceded that the package had been "cleverly put together".

It is tempting to see this as a irrelevant skirmish that has livened up the UK accounting scene. After all, both parties will soon be departing the main stage - Sir David because his 10-year term has only a few months to go and Mr Paterson because in the summer he is leaving E&Y for a quieter life, although he insists he will still be firing in "abusive remarks".

But in fact the debate is central to the increasing pressure for international harmonisation of accounting standards. The ASB says its draft statement of principles is based on the International Accounting Standards Committee's framework and that in turn is based on the concepts that started to be introduced by the US Financial Accounting Standards Board two decades ago. Accordingly, suggests the ASB, the principles are not representative of some way-out view but are being used by leading financial reporting standard-setters around the world.

As far as Sir David is concerned, this is hardly surprising. "The principles have proved an effective means of restoring sound accounting practice by stamping out the appalling abuses of the 1980s. The dog-eared accounting concepts used in the 1980s were simply not up to the task of dealing with the transactions of the late 20th century and had to be replaced - there replacement is the Statement of Principles."

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Property
Home body: Badger stays safe indoors
property
PROMOTED VIDEO
News
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Sport
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week