Accounting - United affront.

(From Financial Director)

Byline: Peter Williams, a chartered accountant and freelance journalist.

Critics of the International Accounting Standards Board - and, in particular, of its charismatic and influential chairman Sir David Tweedie - feel the board has betrayed users, preparers and financial regulators with the premises it has set for its radical programme of accounting standards.

The rows which are presumably going on behind the scenes broke through to the public arena when Sir Andrew Large, deputy governor of the Bank of England, gave a speech in 2004 to a banking conference on financial instruments. What he said amounted to a blunt warning for those who run the IASB. On IAS 39, he said: "The only way forward is to take a few steps back before work starts on re-engineering the standard. I believe many of those interested in the debate would be supportive of this." In plain English, that amounts to 'scrap the standard, it stinks'.

Tweedie's response was not to think about revising the standards he has made so far but to promise even more trouble. Tweedie forecast there would "blood in the streets" by the time he and his colleagues had finished revisiting and reforming the "sacred cow" standards relating to leasing, insurance, performance and pensions.

The question is, whose blood? If the IASB is being criticised in public by the likes of Large, you can bet it is being criticised in private. And the man enduring most of the earache is Paul Volcker, the chairman of the trustees of the International Accounting Standards Committee Foundation. In effect, Volcker is Tweedie's boss. The criticism Volcker has heard is likely to be along the lines that the IASB has been allowed to veer off into some private view of what financial reporting should look like and has not considered what is reasonable or practical. As one IASB critic put it: "Tweedie and co have been allowed to conduct an academic experiment. The only problem is this hasn't been done in an ivory tower, but live on European Union companies." There is still sustained disquiet over the move to fair values, especially where fair value means having to construct a model to find a value in the absence of an easily traceable market price.

And what has Volcker's response been to this mounting criticism of the IASB? In the past few months, he has given a couple of speeches where he seems willing to debate the nature and authority of the standards that the IASB is producing. Volcker realises that achieving international convergence - which he sees as a simple objective with great benefits and is, in his words, "conceptually defensible" - is a difficult job.