Very interesting, indeed.
Prior to election day, there was little conjecture as to the impact it would have on accounting. Oh, some things were clear. McCain had made his opposition to fair value accounting a campaign issue, even during the prmaries. But what about the biggie: U.S. GAAP or IFRS. Would the multi-trillion dollar have an impact on the election?
I reasoned that McCain eventually would support GAAP because of the fair value issue. He would be reluctant to support IFRS because of the IASB’s commitment to fair value. He would value retention of American accounting standards if for no other reason.
I reasoned that Obama eventually would support IFRS. He would support IFRS because (1) his economic advisors have little respect for the value of accounting nuances and in the past had come out strongly for IFRS, and (2) he would outsource certain American practices to European allies, practices unpopular on the world stage. If he supported downsizing the military and withdrawing from unpopular (from a world perspective) Middle East entanglements, then would he support outsourcing American standard setting because American practices are unpopular internationally? I said yes.
Throughout the election, I looked for clues. I queried the campaigns, receiving insults from Obama and silence from McCain. Nothing definitive.
So, on AECM prior to the election, I predicted that that Obama would support IFRS when elected. Since the election, Obama has not disappointed on the IFRS front, naming an IFRS-friendly SEC chair and making promises to radically modify regulation of securities markets.
Of course, I’ve written extensively on how the big accounting firms support IFRS because they stand to profit so obscenely. Could there possibly be a link between Obama and big monied interests on the issue of accounting standards? Sadly, it seems the answer is yes.
Prior to the election, Accountancy Age tracked presidential campaign contributions by employees of big accounting firms. Accountants are conservative and traditionally support Republicans in a big way. Ordinarily I would expect this pattern to continue in 2008. Except for two things: McCain opposes IFRS and Obama is open to change.
I’m not saying that Obama could be bought for campaign donations, but it is true that donations influence politicians. And politicians tend to support the views of their benefactors.
Reported by Accountancy Age in Big Four staff put money on Obama, Big 4 employees supported Obama by a 2 to 1 margin in terms of campaign donations. The dollar amounts don’t appear to be large enough to be meaningful, but then what is meaningful? I’ll do some digging to tabulate the final numbers.
So is the fix in? Is U.S. adoption of IFRS a done deal? Probably. Accounting firms have certainly done their homework and have lobbied the candidate most likely to bring about IFRS. Accounting firm execs have the same scruples and ethics of other business leaders, but they are not dumb. No sirree Bob.
A few years ago, a truism in presidential politics was that you get what you pay for. It’s way to early to say if that will happen here wtih Obama and IFRS, but I’m definitely going to keep my eyes open.
Over and out – - Dave Albrecht