PracticeConsulting‘IAS 39 could warp company finances’

'IAS 39 could warp company finances'

The Association of Corporate Treasurers has warned that the International Accounting Standards Board's proposals for the treatment of hedging transactions could warp the true picture of a company's finances.

Link: IAS training crisis looms

IAS 39 and its fair value treatment of hedging will make the recording of such transactions in large companies’ accounts complex and possibly misleading, according to the association. In particular it is worried about companies with a large number of subsidiaries who might have to account for each foreign exchange transaction seperately.

Companies listed on European Union exchanges will have to use the new rules, which have yet to be finalised, in 2005. The IASB is to put forward changes to the standard to the European Union next year but ACT has asked for small drafting changes to wipe out the anomaly, according to the Financial Times.

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