IAS39 causing ‘illogical’ outcomes

The real life application of controversial accounting standard IAS39 is
causing some ‘illogical’ outcomes, according to a report by the Association of
Corporate Treasurers.

The financial instruments standard, which currently appears in two forms
because of concerns at the European Commission over its impact, has caused
‘undue complications or accounting outcomes that seem illogical, confusing or
even misleading to users of the accounts’ of some of its members.

As part of its work with the International Accounting Standards Board’s
working group on financial instruments, the ACT gathered feedback from members.

It has previously expressed its support for the standard and the concept of
fair value, but is now discovering that ‘normal commercial treasury transactions
and practices give rise to accounting results that do not seem to follow the
true economics of what is being undertaken’.

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Fiona Westwood of Smith and Williamson.