IASB starts work on urgent 'reclassification' project

Sir David Tweedie, IASB chairman

Work begins today on modifying international accounting standards to allow for the reclassification of assets and avoid being subject to a fair value calculation.

The work begins among IASB members and will go on all week as the board attempts to match work being undertaken by the US standard setter.

Reclassification will allow some assets to be moved from ‘held for sale’ to ‘held for investment’ and avoid a fair value.

The IASB has said that the changes are to ensure international standards keep pace with accounting in the US and maintain a level competitive playing field.

However, it has signalled that it expects reclassification to be rare and has committed itself to putting in place anti abuse measures.

The IASB’s trustees have given their approval to a temporary suspension of the board’s due process in order to get the changes through fast.

Insiders have said that the board’s focus remains on avoiding changes that would allow companies to improve their balance sheet position through ‘accounting arbitrage’.

The US standard setter is thought likely to publish details of its own amendments today.

Earlier statements from FASB have been interpreted as a ‘relaxation’ of fair value, but opinion has now settled on the view that it formed only a clarification.

Calls for the suspension of fair value have been vociferous, especially in the US where executives, politicians and bankers have joined to together in demanding change.

So far, the standard setters have stood by the rules. There has been little discussion by opponents of what may replace the standard.