The International Accounting Standards Board must be allowed to focus its efforts on a fundamental rewrite of its rules on financial assets and should not be forced to respond to every short-term policy shift announced by the U.S. Financial Accounting Standards Board, according to a body created to advise both boards.

The Financial Crisis Advisory Group, a panel of experts set up by IASB and FASB last year, made its views clear in a letter to the leaders of the G20 nations. Its call to leave standard setters free to get on with priority work is an attempt to rebuff European critics, notably the French, who feel the IASB has been slow to respond to rule changes announced by FASB.

The IASB came under French attack recently after saying it would not issue an immediate response to a FASB position paper on impairment of financial assets. Changing existing International Financial Reporting Standards so that they offer a level playing field with FASB’s new line on impairment would have been too complex and time consuming, the board felt. Instead, it wants to deal with the issue when it releases an entirely new standard covering this issue, a draft of which it has promised for October of this year.

That decision led to protests from French officials. Economy Minister Christine Lagarde said she was “particularly concerned” to see that the board “is not cooperating quickly and sufficiently enough.”

And Christian Noyer, governor of the French central bank, said Europe could take the power to set accounting rules away from IASB if it didn’t respond to the FASB rule change quicker. "It’s not the IASB that makes the law in Europe,” he said. “If we decide to take back control and write the accounting rules in the European directive ourselves without following the IASB, the issue would be resolved."

In its letter to the G20, the FCAG said it understood policymakers were “under tremendous pressure” to deliver reforms. But it added that “significant, lasting, and global improvement” would stem from two joint IASB and FASB projects on financial instruments and consolidation/derecognition. The boards should be allowed to focus on the complicated technical work to get reforms in this area right, the FCAG said, adding: “Additional work on other issues, beyond the commitments the boards have already made, will inevitably lead to delays on the projects that matter most.”

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