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20 Mar 2008
The International Accounting Standards Board has defended the use of ‘fair value’ accounting against attacks from bankers and insurers who face heavy writedowns as markets come to a standstill and values drop.
Banker and insurer groups claim applying ‘fair value’ accounting puts the financial system at risk in the current turmoil, the Financial Times reports.
The IASB today launched a consultation document as a first stage in a project to replace IAS39, the standard which regulates how financial instruments are measured. The discussion paper proposes possible intermediate approaches to improve and simplify measurement and hedge accounting by amending or replacing the existing requirements.
Introducing the discussion paper, Sir David Tweedie, IASB Chairman, said: ‘IAS39…is far too complex. We are determined to simplify and improve IAS39 by creating a principle-based standard. Those who believe in reducing complexity in accounting standards now have the opportunity to shape the way ahead.’
Further reading:
Fair value shockwaves far from over
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