New fair value standard rushed out by IASB

  • Tweet  
  • LinkedIn  
  • Facebook  
  • Google plus  
  • Send to Kindle
  • Send to  

International standard setter publishes replacement for IAS39 in wake of banking crisis

The International Accounting Standard’s Board has released its contentious fair value standard, ending one of the most controversial projects in its short history.

The new accounting rule, hastily revised and reworked in the wake of the international financial crisis, aims at reducing the complexity of the fair value principle.

Related articles

Fair value - the accounting principle which forces companies to value assets at their every day market value – came under sustained attack in the immediate wake of the financial crisis as banks and other financial institutions watched on as the value of their financial instruments plummeted in severely depressed markets.

The IASB, which already had plans to revise the standard, were forced to accelerate their efforts to bring in a replacement, which was released today.

The board’s swift actions enjoyed broad support from a number of international institutions and countries, however differences remain between its approach to the rule those proposed by its counterpart in the US.

The diverging standards will be a challenge that will need to be overcome if the world’s largest economy eventually decides to take on international accounting rules.

All eyes will now be fixed on Europe’s reaction to the accounting rule, with recent signs suggesting there might be some reluctance to adopt the principle.

European Commission officials expressed fears in a letter to the IASB that the fair value rule could add volatility to accounts.

If Europe rejects the IASB’s standards it would deal a major blow to proponents of international standards and likely encourage American detractors who already say the board is prone to political manipulation.

In a statement IASB chairman David Tweedie said he has delivered on his promise and commitment made to the G20, who asked the board to review the accounting rule.

“Benefiting from unprecedented levels of consultation with stakeholders around the world, the IASB has made significant changes in its initial proposals to improve the standard, provide enhanced transparency and respond to stakeholder concerns,” he said

Companies will now have the option to adopt the standard for their next set of accounts. The rule will however become mandatory by 2012.

Read the full IASB statement: IASB completes first phase of financial instruments accounting reform

  • Tweet  
  • LinkedIn  
  • Facebook  
  • Google plus  
  • Send to Kindle
  • Send to  
Visitor comments
Add comments
blog comments powered by Disqus
More on Accounting standards
International Accounting Standards Board

IASB told to reconsider proposed changes to its conceptual framework

FRC and ICAEW critical of IASB's efforts to reinstate prudence into its conceptual framework


China to explore further use of IFRS

IASB and Chinese Ministry of Finance form joint working group to explore ways and steps to advance the use of IFRS within China

Hans Hoogervorst

IASB moves to help management understand materiality

IASB publishes draft guidance to help management apply the concept of materiality


Going concern guidance extended to companies outside of UK governance rules

FRC issues for consultation draft going concern guidance for companies outside of the UK corporate governance code

Latest Briefings
Current Finance Vacancies

Graduate Leadership Programme

Salary: £26,000 + Market Leading Benefits
As a three-year rotational programme, you’ll get the best grounding possible into our business... Luton, Bedfordshire

Senior Operational Reporting Analyst

Salary: Competitive with Market Leading Benefits
Reporting to the MI Reporting Manager, the purpose of this role is to provide Operational Reporting to the Commercial.... Luton, Bedfordshire

Audit Senior - Big 4 - Best clients in the Bristol market

Salary: £32000 - £38000 per annum + Benefits
Need a new client base to go with your Newly qualified status? England, Bristol