Let’s dip once more into the Inside Standard Setting blog of Armand Capisciolto, Chair of Canada’s Accounting Standards Board, and a recent post titled International Relationships Matter!:

• I believe that accounting standard setting should remain apolitical. Our goal is to create standards that support informed economic decision-making—standards that are stable and reliable, regardless of political shifts. Global capital markets depend on consistent, comparable information, and to ensure that, we need to work together across jurisdictions, regardless of political differences.
• While I hold to the belief that accounting standard setting should be apolitical, I cannot help but acknowledge that 2025 has been a year where global politics have, at times, made cooperation more challenging. Longstanding alliances have been tested, and trade wars have emerged. These developments are perplexing to me, especially given that in the world of accounting standard setting, cooperation across borders has always led to improved financial reporting and better outcomes for every jurisdiction.
• …international collaboration is never a zero-sum game. When done correctly, everyone benefits. I firmly believe that accounting standard setting is not unlike any other area of global cooperation: when relationships are nurtured, everyone wins.

The references there are to accounting standard setting, this being the blog’s focus, but it could also be a tacit acknowledgement that disclosure-related standard setting is relatively more likely to be “politicized” (a flexible term no doubt, but we’ll just go with it). Sustainability reporting provides a grim current example of this: it was always obvious that a US Republican administration would largely abandon the SEC’s previous efforts in that area, and just about as plain that Canadian regulators would then meekly follow suit. By their nature, pure accounting (recognition, measurement) issues appear to be inherently less easy to politicize, and the nature of any politicization that does occur is even more likely to be cynically situation-dependent (we recently recalled that a time existed when Republicans were greater proponents than Democrats of adopting IFRS for US reporting purposes, and they’re currently more aggressive on facilitating crypto-assets and all that goes with them, although such behaviour seems counter to any normal notion of “conservatism.”) The most notable example of a politicized accounting issue probably came in the wake of the 2008 financial crisis, as summarized here by Wikipedia:

• Critics have blamed fair-value accounting for the subprime crisis, pointing out that fair-value accounting created difficulties measuring the value of subprime positions. They claim that fair-value accounting contributed to excessive leverage used by banks during boom period, and led to a downward spiral during bust period, forcing banks to value assets at “fire-sale” prices, creating a much lower than necessary valuation of subprime assets, which caused contagion and engendered the tightened lending…
• One argument is that a majority of structured debt, corporate bonds and mortgages were still performing, but their prices had fallen below their true value due to frozen markets (contagion as discussed above). Opponents also state that fair value accounting undermines critical foundations of financial reporting, including verifiability, reliability and conservatism. It is argued that fair value accounting lacks all three attributes. Some opponents may even suggest that historical cost accounting is more accurate by arguing that financial institutions are forced to record any permanent impairment in the market value of their assets.
• On the other hand, proponents for fair value accounting believe that fair value was not the cause of the crisis. Instead, they suggest fair value only communicated the effects of poor decisions, such as subprime loans. Proponents also believe that fair value accounting provides investors with transparency into the assets and liabilities of companies. There are empirical foundations that prove fair value accounting to be a better indicator of value than historical cost. Removing transparency by using historical cost accounting may make matters worse. It is possible the market reacts more extremely if the fair-value or current market prices are not disclosed. There is no empirical evidence that using historical cost accounting will calm the investors.
• Proponents argue that fair value accounting provides a clear measurement of the underlying value of assets. They state that the subprime crisis was not caused by accounting, but by bad operating of firms, investors and sometimes by fraud. It is unfair to blame the fair value accounting that is merely a reflection of the actual problem.

For now, that debate is on the back burner, but it’s not hard to imagine variations on it arising in a future situation where measurement volatility might be characterized as more disease than diagnosis; one can likewise imagine something like goodwill accounting being demonized (bring back pooling!), or indeed any area in which the nature of the amounts on the balance sheet requires a little conceptual engagement. Capisciolto is surely right about the importance of nurturing international relationships; fortunately for the cause of accounting standard setting, it seems for now to be resisting the political mentality which tends to see such relationships as inherently exploitative…

The opinions expressed are solely those of the author.