A democratic deficit in accounting

Sir, Michael Starkie (Letters, June 12) was quite right to draw attention to the weaknesses of the theoretical model being used by accounting standard-setters. A dozen years ago all the (then) six leading British accountancy firms expressed grave doubts about the UK Accounting Standards Board's draft Statement of Principles of Financial Reporting and its practical implications. (It was derived from the American Financial Accounting Standards Board's conceptual framework.) But the final version was little changed. It does not have “general acceptance” among British accountants.

There are striking similarities between the International Accounting Standards Board and the European Union. Both are driven by well-meaning, intelligent, determined people. But they seem unable to listen to reasoned disagreement or to trust people to exercise their own judgment. Their arrogant “command-and-control” attitude reminds me of Douglas Jay, a British minister in the postwar Attlee government, who famously said: “The gentleman in Whitehall really does know better what is good for people than the people know themselves.”

The people of Ireland have just voted in a referendum on the new constitutional treaty. Like some accounting standards, it is virtually incomprehensible. Meanwhile, the British governing party has blatantly broken its manifesto promise to hold a referendum. Is it not scandalous that the one lesson the European Union's leaders seem to have learned is anti-democratic: never again to “risk” consulting the people?

D.R. Myddelton,
Emeritus Professor of Finance and Accounting,
Cranfield School of Management,
Cranfield, MK43 0AL, UK

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A democratic deficit in accounting