Armand Capisciolto, Chair of Canada’s Accounting Standards Board, recently returned to the topic of politics in standard-setting…

Here are some extracts:

• In recent years, I have heard some say, that accountants will save the world, while others have complained that standards setters are politically motivated to influence behaviour.  I believe both views miss the mark.  Although I believe financial reporting and high-quality standards are critically important, the standards themselves do not directly change behaviour…(rather)…it is the unbiased financial information produced by the entities that follow the standards we set, that is influencing behaviour.
• In addition to being apolitical, I believe standards should also be risk-agnostic.  Whenever the uncertainty from a risk – any risk – could materially affect recognition or measurement of an amount in the financial statements, it should be disclosed.
• Disclosure of certain risks get attention from both sides of the political spectrum.  Some say that disclosures don’t go far enough, while others says they go too far.  Again, I disagree with both sides as risks either exist or they don’t – risks are not political.
• …To maintain high-quality accounting standards, it is critical that standard setting remains apolitical and risk-agnostic. I am very confident that this will continue to be the case. But we must remain vigilant. To protect high quality independent standard setting, we must push back against any political interference in the process.

As we covered here, Capisciolto had covered related matters just seven months earlier, noting then:

• 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.

Plainly the topic is on his mind (maybe even more than baseball!), and although he doesn’t specify what prompted the latest post, it wouldn’t be a big surprise if it had something to do with the SEC’s recent veiled threats against the IFRS Foundation. As we covered here, SEC Chair Paul Atkins recently commented that “the IASB must promote high-quality accounting standards that are focused solely on driving reliable financial reporting and are not used as a backdoor to achieve political or social agendas.” Not that Atkins offered any evidence of such a thing happening: his premise was that the work of the ISSB and its interaction with the IASB, however neutrally conceived and communicated, is inherently a politically-charged “backdoor.” This doesn’t seem at all correct to me, but if someone insists that a certain action or viewpoint is political, that can’t likely be countered simply by asserting that they’re wrong. For example, some insist (presumably at least sometimes sincerely) on seeing any heightened emphasis on pronouns (on simply asserting them as part of one’s basic handle or profile for instance) as an inherently political action in its challenge to previously unquestioned norms and practices, no matter that others see it as a matter of objective clarity and dignity.

I’m not so sure that accounting standard setting can be entirely insulated from political philosophy. We might again cite, for example, the disputed role of fair value accounting in the 2008 financial crisis: while that debate is on the back burner for now, 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 envisage 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. In such cases it might be very hard to distinguish true intellectually-rooted disagreement from “politically”-motivated advocacy, and indeed, I’m not sure much could be gained by trying.

Even leaving aside such potential hot buttons, it’s not clear to me that politics can be systematically avoided in standard-setting, certainly not at this current grim time. Trump’s relentless challenge to evidence-based decision-making, indeed to rationality itself, his wanton destructiveness and corruption, and his near-supernatural ability to convert at least semi-intelligent people into rabid advocates for whatever drifts through his head, all pose severe threats. Right now, the most active Trumpian targets in this blog’s general field of interest (SEC effectiveness, foreign issuer accommodations, interim reporting frequency) can be separated from the content of financial reporting itself, but really, would it surprise anyone if the contagion spread? I entirely agree with the closing note that “we must push back against any political interference in the process,” but time and time again, Trumpian-era malevolence has proved entirely immune to (if not capable of feeding on) politely traditional counter-argument and resistance…

The opinions expressed are solely those of the author.