PracticeConsultingTreasurers slam new hedging standard

Treasurers slam new hedging standard

The Association of Corporate Treasurers has hit out at the recently published standards on financial instruments from the International Accounting Standards Board.

Link: IAS special report

In a letter to the Financial Times, ACT chief executive Richard Raeburn said that although IASB chairman Sir David Tweedie is advocating convergence with US standards ‘IAS39 diverges from the US equivalent in ways that will cause real harm to corporates and additional volatility from even the most prudent hedging’.

He added: ‘The IASB’s effectiveness tests are more onerous than and divergent from the sensible US approach.

‘IAS 39 also restricts the availability of hedge accounting for the normal netting undertaken by a treasury centre, whereas in the US this has been recognised as an issue and accommodated within the application of their standard.’

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