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
banks-montage

Banks take a forward view of losses under new IFRS rule

IASB issues finished financial instruments accounting standard, but fails in convergence attempts with FASB

Stephen Haddrill

FRC reveals ‘struggle’ in IASB discussions

Working with international standards body "like pushing water uphill", Haddrill admits

Michel Prada IASB trustee chairman

IFRS chair opens door for 'prudence' reintroduction

IFRS Foundation chair suggests prudence should be reinserted into conceptual framework

ifrs-graffiti

Conceptual differences hamper lease accounting project

Attempts by IASB and FASB to hammer out new lease accounting standard hampered by 'conceptual difference of opinion', finds Naomi Rainey

Latest Briefings
Current Finance Vacancies

Finance Analyst

Salary: £50000 - £60000 + £6k car + 20% bonus + bens
Are you a Big 4 trained ACA or Blue-Chip trained CIMA looking for a chance to join a global FTSE-25 Plc in an analytical role? This role will see you develop KPI's, produce analytical reports and liaise cross-functionally. Interested? Read on for more... London (Greater) / London (Central), London (Greater) / City of Westminster, London (Greater) / L...

Financial Controller

Salary: £50000 - £60000 per annum
Are you an entrepreneurial newly qualified accountant, wanting to gain maximum exposure to the financial side of a small, and rapidly growing business? London (Central), London (Greater)

Sales Ledger Accounts Clerk

Salary: Negotiable
This role is in our newly restructured Finance division, working under the Head of Bordereaux Credit Control Lindfield, West Sussex