Tweedie told Accountancy Online during an IASB meeting in Paris that Enron’s incomplete disclosures and sudden insolvency will have made the US Securities and Exchange Commission and the US Financial Accounting Standards Board question the reliability of rules-based accounting standards.

Tweedie said Enron was a salutary shock to the Americans -- who have a complicated rules-based approach to setting accounting standards -- that might make them more eager to converge with the IASB’s principle-based approach to accounting standards.

Enron filed for Chapter 11 corporate bankruptcy protection on December 2, shortly after announcing that it had overstated its net income by $569 million over the previous four years, and that its 1997 to 2000 accounts were unreliable.

Tweedie also commented on testimony given at a US House of Representatives Financial Services Committee by Enron’s auditor, Andersen, in which Andersen CEO Joe Berardino, admitted there were deficiencies in US financial reporting. "In a way, Berardino’s comments help the IASB a lot," said Tweedie. "Everyone is suddenly aware that anyone could have an Enron, and awareness of the part flawed accounting standards had to play allows us to take a tough line."

He added that the Enron collapse "could turn out to do for the IASB what the Polly Peck collapse did for the UK Accounting Standards Board when it started up 10 years ago -- people who had never thought about accounting standards were suddenly aware of their importance."

Board member Bob Herz suggested to the board this week that it should keep some agenda time set aside in the IASB’s first meeting in the New Year to deal with "fallout" from the Enron collapse. The SEC, the FASB and an SEC-endorsed technical group made up of Big Five technical personnel, including Andersen staff, are currently looking at ways of altering US GAAP to prevent manipulation.

These groups are expected to make public their first recommendations in early January 2002. David Tweedie said the board will look at these proposals and, if necessary, adopt them when it begins work on its improvements project on consolidation at the January meeting.