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Published on: 5/29/2002
Last Visited: 5/29/2002
UK Accounting Standards Board technical director Allan Cook compared the International Accounting Standards Board's prescience in selecting consolidation as a project last year with Graham Greene's ability to write about particular areas of the world just before they became major trouble-spots, such as Cuba just before Castro's ascendancy.
The Enron debacle has highlighted just how important it is to get consensus on such an important topic, and on Monday (20 May) the UK ASB presented a paper to a meeting of the IASB and its eight national liaison standard-setters.Reaching that consensus may be as difficult as resolving some of the political spats described in Greene's novels and eventual lines on the issue were drawn with Australia, New Zealand, Germany and France on one side; Japan, Canada and the UK on the other, with the US sitting on the fence.
The participants spent some time debating the nature of ‘control' as the criterion on which ownership should be determined.‘We do believe that one entity can control another,' said Cook.
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Cook said that where people differ over their views of control, it is easier to manage if you write two concepts into the definition of control: the ability to direct; and the ability to benefit.
The discussion moved on to enforceable rights.‘If rights are currently exercisable, they have the ability to direct,' said Cook.
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Some board members felt that it was difficult to separate leases and derecognition from SPEs, but Cook said the ASB ‘deliberately held back on going into derecognition in this paper'. 'I support a components approach on establishing rights and obligations, but you need to keep an overall picture of the business,' he added.
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