Contentious proposals to endorse a carved up version of financial instruments standard IAS39 were put forward at a European Commission meeting yesterday, even though several nations have already expressed determined opposition to the idea.
Link: IFRS special report
The EC’s accounting regulatory committee met on Wednesday in the hope of finally agreeing a way forward on the standard. A version of IAS39 with the most controversial and unfinished parts removed had been drafted for approval by member states. But prior to the meeting some nations had already voiced their disapproval of taking a path different to the one the International Accounting Standards Board has been following.
‘Insufficient evidence has been adduced as to why IAS39 as currently drafted is not being proposed for adoption,’ said Michael Ahern, the Irish minister for trade and commerce. ‘I am opposed to the ‘carve out’ approach on a number of serious grounds. In particular, such an idea may not be technically feasible or indeed legally sound, and is likely to affect the international accounting standardisation project.’
Ahern added that altering IAS39 would set an ‘unhealthy precedent’.
Other nations, such as Germany, were keeping their cards close to their chest before yesterday’s crunch meeting, but were understood to have reservations about the proposals.
The UK strongly supported the endorsement of the full standard before it was scrapped, and the government is less than happy with the EC’s new idea.
DTI minister Jacqui Smith has said that ‘it would be difficult for Europe to maintain international credibility without key standards on financial instruments’.
Just before the meeting a DTI spokeswoman said: ‘We are confident of agreement in time for application.’
Fritz Bolkestein, the European Commissioner responsible for international standards, has already confirmed that if proposals for a substantially altered IAS39 fail to gain sufficient support among member states, the fallback position was that no standard on financial instruments would be introduced in 2005.
This would remain the case until the issues relating to the standard were resolved by the IASB.