Corporates may have to develop parallel balance sheets to give a true
reflection of vehicles which have previously been left out of formal statements,
international accounting standard setters have revealed.
The International Accounting Standards Board is to publish a consultation
paper on off-balance sheet practices this year, following criticisms over the
role of such off-balance methods in the credit crunch.
Among the solutions to the practice is the suggestion to structure a
‘parallel’ balance sheet that would explain off-balance sheet vehicles in detail
and reconcile the figures with those on the main balance sheet.
Sir David Tweedie, head of the IASB said the organisation was trying to
‘simplify the accounting so banks can say: “If it all blows up, this is what we
face, but here are the reasons it won’t.”
‘That way, people have the information,’ said Sir David.
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