Trustees back suspension of standard setting process

Gerrit Zalm

The due process for setting international accounting standards will be suspended next week as the board moves to push through changes to match those under US GAAP for the reclassification of assets.

The suspension comes with the full backing of IASB’s trustees who issued a statement from their meeting in Beijing this supporting the IASB in its approach and in its independent role.

Trustee chairman Gerrit Zalm, former finance minister of the Netherlands, said: ‘We support the IASB in suspending the normal due process to take action in these present extraordinary circumstances. The goal must be to ensure that a fair and transparent level playing field related to financial reporting exists globally. We strongly believe that the IASB, as the independent standard-setter for more than 100 countries, is best placed to address financial reporting concerns in a manner that will improve confidence in the markets.’

The IASB hopes have a standard on reclassification in place by the end of next week.

Reclassification would allow some assets to move ‘held for sale’ to ‘held for investment’ a change which would mean that fair value would not be applied.

Politicians in the UK, US and Europe, as well as businessmen have all called for the suspension of fair value to aid the banks caught up in the current financial crisis. The US Treasury secretary reserved the right of Wall Street’s watchdog to suspend fair value if necessary.

EU commissioner Charlie McCreevey has said that Europe could not maintain fair value if the US called time on the standard. Yesterday, he gave a speech backing reclassification. He said he hoped national governments would act to put it in place even before it received the full backing and sign off from the EU.

However, the IASB has made it clear that it expects reclassification to be rare and will also work on putting in place an anti abuse measure to head off any illegitimate use of the standard.