The global accounting standards set

The
global
accounting
standards
setter
has
defended
its
role
in
the
financial
crisis and
blamed
prudential
regulators
for
lax
rules
that
enabled
banks
to
make
risky
bets,
dole
out
excessive
bonuses
and
pay
too
much
in
dividends.
Members
of
the
International Accounting
Standards
Board,
visiting
Sydney
yesterday,
also
defended fair
-
value accounting,
which
banks have
criticised
for
exacerbating
the
crisis
by
forcing them to
record
massive
write
-
downs
in
asset
values.
"
We
are
not
set
up
to be
focused
on
financial stability,
"
board member Stephen Cooper
said.
"
There
are
other [prudential
regulators]
who are already set
up
to
do
that,
but they
don't
want to
do
it.
"It
seems crazy
to
me
that people are
asking
us
to
do something
we
are
patently
not
equipped
to do.
"
The
IASB
will
present
its
views to
the
(2-20
meeting
of
world
leaders
in
London
next
month
and
will
urge
leaders
to
put
the onus
for
oversight
of
banks
on
prudential regulators.
"
The
regulator
should
be
focused
on
not
allowing
banks
to
pay
dividends
and
do share
buybacks
if
that
is
going
to
put
the
bank
in
danger,
rather than
trying
to
change the
profit
that
is
reported,
"
Mr
Cooper
said.
The
IASB
said
the
problems
with
fair
-
value
accounting
-
the
method
of
valuing assets
at
market
value
rather than historical
cost
-
arose
because
it
was not
adopted
widely
enough
and should
be
applied
to all
financial
instruments.
The major
investment banks apply
the
method
to
only
60
per
cent
to
80
per
cent
of
financial
instruments
on
their
balance
sheets,
and
the
major retail
banks
apply
it
to
as
little
as
10
per
cent
to
20
per
cent.
"
People are
asking
us
to
take
a
haircut
to fair
value
or
other measurements
when
times
are
good
and increase the
fair
value
when
times
are bad,
"
Mr
Cooper
said.
"
But
to
decide
by
how
much
you
haircut
and
by
how
much
you
increase,
you
have
to
be
close
to
the
banks
and
the
markets.
The
banking regulator
has
that
closeness.
"
lASB
member
Warren
MacGregor
said
the
banking
industry
should
keep
an
additional
capital
buffer to
protect against catastrophes,
as
insurers
did.
He
also
said
Australian
companies
should report quarterly,
as
in
the
US,
rather than
twice
a
year, to
ensure
the
timely
disclosure
of
asset prices
"
if
the
need
for
timely information
is
clearly
there.