View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
September 29, 2009

Pacter profile: Standard-setting’s ‘go-to’ guy

Paul Pacter is the architect of IAS 39 and IFRS for SMEs, two international accounting standards that have left their mark on accounting for vastly different reasons. The Deloitte Global IFRS expert catches up with Arvind Hickman to talk about his career and thoughts on standard-setting.

Paul Pacter
   Paul Pacter, Deloitte Global

There are many bankers and politicians around the world who might wish Paul Pacter, engineer of the most controversial international accounting standard in history, had pursued his passion in photography rather than become a successful accountant.

The New Yorker’s work is being blamed for the write downs of billions of dollars in assets as capital markets have crumbled under the strain of the credit crisis.

Since late 2008, banks have collapsed, countries are now mired in recession and at the centre of this mess, according to some business and national leaders, is International Accounting Standard 39 (IAS 39): Financial Instruments: Recognition and Measurement – an accounting standard Pacter began work on 13 years ago.

So much is made of the controversial mark-to-market measurement model used to value some financial instruments that the EU has threatened to create its own standards to provide artificial relief to battered balance sheets.

Global standard-setting chiefs last year bowed to political pressure and provided a re-classification provision that allows some financial instruments to escape mark-to-market. A new project is underway to improve accounting for financial instruments but political involvement in the process has left a bitter taste in the mouths of standard setters.

Playing politics

It is hard to imagine the world leaders meddling in the development of internationally accepted medical standards, says Pacter when asked about his take on the political/accounting tug of war.

“I think it is inappropriate for politics to enter into what an accounting standard should be just as I would not want the politicians setting standards for how my surgeon is going to operate on me or how my dentist is going to take care of me,” the Deloitte IFRS Global Office director says.

“I want the politicians to regulate the medical profession in respect of licensing, with respect to standards of cleanliness and that kind of thing. But I don’t want them saying ‘for this ailment, you’ve got to follow this procedure’, and I feel the same way in accounting. Accounting should reflect economic reality… there is not a justification to bias accounting to achieve a political goal – no matter how worthy.”

Pacter is the first person to admit IAS 39 is flawed. In 1996, when development began, only the US had begun setting a standard that addressed financial instruments.

Pacter became involved after the market rejected two previous International Accounting Standards Committee (IASC) exposure drafts (in 1991 and 1994) and the deadline for drafting IAS 39, as committed by the IASC to the International Organization of Securities Commissions, was fast approaching.

“We developed standards that try to lead the world but not be too far out in front of the world,” Pacter says.

“The result of that is a standard that says you should measure only some financial instruments at fair value and leave the others at cost, resulting in apples and oranges both on the balance sheet.”

The IASC’s successor organisation, the International Accounting Standards Board (IASB), is now in the process of reviewing IAS 39 (see story page 4). Pacter is not involved in the project, but says it is in the hands of a team of very capable people.


Pacter is known as a ‘go-to’ guy in standard-setting circles and led the IFRS for SMEs project, a set of simplified global standards that are being lauded a success across the world.

Published in July, they were immediately adopted by South Africa. A few EU jurisdictions, including the UK, have proposed to adopt it.

Pacter became a director of the project following a phone call from IASB chair David Tweedie in 2003.

His role was to liaise with a working group of 40 members from diverse backgrounds, the largest in the history of the IASB, to develop the simpilified standards.

The project involved visiting 55 countries, an added bonus for the 66-year-old who cites travelling and photography as two of his greatest passions.

Recently, Pacter completed a two-week road trip through northeast Spain, southern France and Monaco.

Belorussian roots

It is exactly 1,504 kilometres north east of the principality, in the former Belorussian village Shats’k, that Pacter finds his ancestral roots.

Pacter’s grandparents left the village of 6,000 people in the early 1900s and emigrated to the US to escape from tzarist and communist rule.

Accountancy is what Pacter lives for and, oddly enough, it’s also the reason he is alive. His parents first met in accounting class at City University of New York; both became accountants.

Pacter was born in the Bronx borough of New York in 1943.

A fan of Buddy Holly and Lynyrd Skynyrd at school, Pacter was planning to study law or become a teacher after completing secondary studies at Stamford High School, Connecticut, but changed his mind when a psychologist advised he would be better suited as an accountant. Pacter completed a business degree at the Syracuse University, New York in 1964 and a PhD from Michigan University in 1967.

He taught accounting for two years at New York University before moving into practice to broaden his horizons.

Pacter joined KPMG predecessor firm Hurdman & Cranstoun in 1969, then the ninth-largest firm in the US.

He got his first taste of standard-setting as a “bag carrier” for Charles Hellerson, his boss in 1969. Hellerson was a member of the Accounting Principles Board (APB), a predecessor to Financial Accounting Standards Board (FASB). Pacter attended meetings with him to provide technical support.

The APB was dissolved to form the Financial Accounting Standards Board in 1973 in order to make standard-setting more independent of the profession.

Pacter was founding staff member at FASB and worked on several important and formative standards, including Financial Accounting Standards No 2, Accounting for Research & Development, which later helped define what an asset was within FASB’s conceptual framework.

Pacter also authored Financial Accounting Standards No 5, Accounting for Contingencies, which helped define what a liability was within the conceptual framework.

In 1984, Pacter helped draft the constitution for the Government Accounting Standards Board (GASB), the US public sector standard setter.

Following his work for GASB, Pacter became the commissioner of finance at the City of Stamford, Connecticut, a position he held for seven years.

“Here I was setting up a government accounting standards board, never anticipating that I would actually be a chief financial officer of a government that had to prepare financial statements that GASB standards would apply to,” he says.

“I didn’t just deal with accounting and business people, but with firemen and garbage collectors, health care workers, educators and people in every other conceivable area of government. In those days, the budget was about $300 million a year, we had over 3,000 employees, so it was a pretty good size and diverse operation. I enjoyed the work very much.”

Pacter was hired by the International Accounting Standards Committee in the mid-’90s to write standards on financial instruments, agriculture, segment reporting and discontinued operations, and interim reporting, among others.

He joined Deloitte Hong Kong in 2000 and worked with China’s Ministry of Finance to help develop Chinese accounting standards.

That December, Pacter launched the excellent Deloitte IAS Plus website, which contains daily updates on changes to standards, regulation and other accounting developments.

IAS Plus has been visited by more than 9 million users and it is not uncommon for more than 50 users to visit at any time.

Pacter writes all the content and works on the site seven days a week. It is a passion he maintained while working on IFRS for SMEs. Pacter devotes two thirds of his time to the IASB and a third to Deloitte, primarily updating IAS Plus.

A cornerstone of the website is a table that highlights those jurisdictions that use or are planning to use IFRS and those that don’t.

This resource is regarded as a world authority on IFRS use and, therefore, subject to all sorts of claims from IFRS aspiring nations that Pacter must carefully test.

Pacter’s latest challenge is to chair the IASB’s new IFRS for SMEs Implementation Group, which will help jurisdictions implement the new standard and assist accountants using it.

Despite the current controversy caused by some of his earlier work, Pacter still has a burning passion for standard-setting. He is unsure when he will retire from the IASB.

In June 2011, IASB chair David Tweedie will complete his second term. Pacter says his own retirement could be sooner but will not be any later than this changing of the guard.

He will continue working on IAS Plus for as long as he is able to but will relinquish his standard-writing duties.

It will draw the curtain on the career of one of the great authors of accounting rules of this era.

Perhaps bankers and politicians might not miss Pacter’s work, but there’s little doubt his legacy will live well beyond this recession and the next time accounting rules are blamed for the world’s capital market ails.


Paul Pacter


26 January 1943, Bronx (New York City), New York

Marital status

Single, no children


Stamford High School, Stamford, Connecticut


Undergrad: Major in Accounting, Syracuse University, 1964; Graduate: PhD from Michigan State University, 1967

First job

Taught two years in Graduate School of Business, New York University. Then worked for Hurdman & Cranstoun, then the ninth largest firm in the US in 1969. Joined FASB when it was formed in 1973


Apartments in Hong Kong and London

Additional homes

For the past few years my additional home has been the doghouse, where I often found myself after pushing the IASB Board too hard for more simplifications of financial reporting for SMEs


Photography, hiking, computers, theatre (particularly drama)

Favourite Food

Anything Italian (though preferably without much garlic – a request that contradicts the sensibilities of most Italian waiters)

Favourite drink

Sparkling water (we called it seltzer where I grew up)

Favourite book

Lately I have enjoyed reading about society and culture in China (examples: Brothers by Yu Hua and China Road by Rob Gifford) and India (examples: White Tiger by Aravind Adiga and The Six Suspects by Vikas Swarup) and more generally (example: Ghost Train to the Eastern Star by Paul Theroux)

Favourite film

Apocalypse Now

Favourite music/band

Favourite artist is Buddy Holly. Favourite group is Lynyrd Skynyrd. Favourite music genre, besides 50s-60s rock is classical chamber orchestra

Car you drive

I have not owned a car since June 1996. Rent occasionally. Just completed a delightful two-week driving trip through northeast Spain (Madrid, Zaragoza, Poblet, Montblanc, Sitges) and Southern France (Carcassonne, Nimes, Arles, Orange, Les Baux, St Remy, Aix en Provence, and Nice) and Monaco

What you can’t live without

Ice cream. Oh yes, and did I mention ice cream?

Ideal guest at a dinner party

IASB board member Jim Leisenring – there is always stimulating conversation when Jim is there

Where are you most happy

Working on my website

Source: International Accounting Bulletin

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A roundup of the latest news and analysis, sent every Wednesday.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy


Thank you for subscribing to International Accounting Bulletin