RegulationAccounting StandardsIASB release fair value draft

IASB release fair value draft

IAS 39 exposure draft is released for public comment.

The International Accounting Standards Board has released its draft for
controversial accounting rule IAS 39 which came under fire for exaggerating the
effects of the financial crisis.

The exposure draft promises to `answer concerns raised by interested parties
during the financial crisis’ and significantly reduce complexity in the
classification and measurement of financial assets.

IASB chairman Sir David Tweedie described the release as an important first
step towards providing investors with a better understanding of financial
instruments.

`The financial crisis has demonstrated that investors need to be given a
better understanding of information presented in the financial statements about
financial instruments held or issued by a company,’ he said.

`Making it easier for investors to understand financial statements is an
essential ingredient to the recovery of investor confidence.’

European finance ministers have been eagerly anticipating the exposure draft
after in part blaming IAS 39 for exacerbating the effects of the global down
turn.

The exposure draft introduces two categories for the classification of
assets: amortised cost and fair value.

If the draft is adopted users will have to take into account whether a
financial instrument has basic loan features or is managed on a contractual
yield basis before classification.

The IASB said a new standard will be available for non-mandatory use for 2009
year-end financial statements.

To view or comment on the exposure draft visit:
www.iasb.org

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