International accounting rule setter speeds up reform of fair value system
A TOP international accounting standards setter yesterday agreed to speed up the revision of a rule criticised by European Union (EU) finance ministers for amplifying fallout from the credit crunch.
The International Accounting Standards Board ( IASB ), which sets financial reporting rules used in more than 100 countries around the globe, including the EU took the decision at a board meeting that ended on Thursday.
“It’s true we are trying to be responsive to them to get something urgent, but what we are focussing on is the G20 request to reduce complexity by year-end,” IASB board member John Smith said.
He added the July draft would look at the classification and measurement of assets.
A second document would follow later in the year on impairment and provisioning, with the final document thereafter on hedging.
The IASB had planned to publish a draft overhaul of its IAS39 rule that deals with fair value and mark-to-market in October.
This timetable is too slow for the EU’s executive European Commission which wants changes in place in time for when banks compile their 2009 annual reports.
The existing rule forces banks to value complex assets at current depressed market prices, resulting in huge write-downs that have unnerved investors.
Earlier this week the IASB appointed two leading investment analysts – Patrick Finnegan and Patricia McConnell – to replace two retiring members.