IASB defends use of ‘fair value’ accounting

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

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

Financial regulation at the heart of the sub-prime

story in the Financial Times

Related reading

Fiona Westwood of Smith and Williamson.