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Standards bodies at loggerheads: IAS39 has caused a continental rift at the eleventh hour.

Document Cited in Related
Vincent
AuthorBerens, Camilla
PositionRegulation - International accounting standard

The UK body responsible for accounting standards has fallen out with its European counterpart over one of the most contentious aspects of the transition to international accounting standards (IAS). The clash occurred when the EU's Accounting Regulatory Committee (ARC) voted to adopt an amended version of IAS.39, "Financial instruments: recognition and measurement".

The change, which followed strong lobbying from the French banking sector, relaxed some of the proposed rules governing hedge accounting and fair value measurements for derivatives and other financial instruments. The ARC's decision is not the final stage of the EU adoption process, but is a telling sign of the final outcome. This has triggered fears that other amendments might be forced through, leading to the weakening of a supposedly unified set of standards.

The UK's Accounting Standards Board (ASB) is still recommending adherence to the original standard. "The position the EU has reached on the adoption of IAS39 is unsatisfactory," said the board's chairman, Ian Mackintosh. "The adopted standard may give rise to artificial volatility in reported profits and difficulties in application by limiting the fair value...

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