A ROW has erupted between Britain’s biggest institutional investors and Sir David Tweedie. Tweedie, the chairman of the International Accounting Standards Board (IASB), stands accused of trying to “dumb down” UK accounting rules.

Investors have accused Tweedie and the IASB of attempting to introduce “idiotic” measures that they say would give chief executives as much power as they like. They have demanded that the board drop the plans.

But Tweedie has further incensed investors by rejecting their complaints because he said they were submitted too late. Last week he wrote to the heads of the biggest investor bodies — the National Association of Pension Funds (NAPF), the Investment Management Association (IMA) and the Association of British Insurers (ABI) — saying their letters of objection had been received but the introduction of the new set of regulations, called IFRS 8, was ready to be ratified by the European Commission.

This weekend, angry investors are plotting to retaliate by going over Tweedie’s head and appealing directly to the commission to have IFRS 8 struck out.

One City source said: “Investors are really angry with the way this has been handled. They are not prepared to be fobbed off and if the IASB won’t listen they will go to the next level.”

It is not the first time Tweedie, a 62-year-old plain-talking Scot, has attracted controversy by introducing new accounting standards. Another standard, IAS 39, which dealt with financial instruments, became one of the best-known accounting rules in the world when critics said it was insensitive to the needs of EU banks and regulators. During the row Tweedie joked that he had to wear a “tin hat” when he went to Brussels. Now, because of the latest row, some investors are calling for him to stand down.

Behind IFRS 8 are British concerns that UK-style accounting is being diluted as the IASB seeks to “converge” its standards with those in America. Accountancy firms Deloitte & Touche and Ernst & Young are also thought to have concerns.

One source said: “Of course we support the long-held view that common accounting between companies around the world is the idea. But postEnron, we all thought the US standards would be brought in line with the UK. Now it seems it’s the other way round. But where is the sense in adopting the rules that allowed Enron to happen?” Under the current standards, companies have to present to shareholders a breakdown of information — such as profits, losses and assets — across a range of sections; for example, a breakdown of the company’s performance in different countries or regions and in its major business divisions.

Under IFRS 8, which is based on SFA 131, the US standard, companies are free to report far more generally and without such detailed breakdowns by sector.

David Gould, secretary of the NAPF, has written to the commission, saying: “The thinking behind IFRS 8 is a harmful precedent for any standard. IFRS 8 assumes a US view of corporate governance: that directors ‘oversee’ management performance on behalf of shareholders.

“What is lacking is a fully objective economic purpose . . . we see standards being potentially lowered, to the deteriment of shareholders.”

The NAPF, the IMA and the ABI have complained that the provisions of IFRS 8 could make it harder for investors to understand what is happening inside companies.

The NAPF says IFRS is not consistent with Britain’s cherished idea that accounts should present a “true and fair view” of the state of a company.

The IMA complained that IFRS meant “the US standard is being adopted unilaterally when the underlying legal framework in the US is completely different from that in many EU member states”.

Tweedie could not be reached for comment this weekend.

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