A huge number of bodies from across the world will next week voice their concerns to the International Accounting Standards Board over its proposals to changes in standards related to financial instruments.
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The 108 different organisations taking part in a series of nine roundtable sessions open to the public are expected to show strong opposition to many aspects of the exposure drafts on IAS 32 and IAS 39.
The sessions will begin in Brussels on Monday before moving to London on Wednesday and are designed to allow the various firms, institutes, banks and other organisations to voice concerns and propose alternative solutions to those mentioned in the exposure draft. The IASB however has a reputation for standing by even its most controversial standards.
Sir David Tweedie, chairman of the IASB, said the sessions could results in quite heated discussion. ‘Some of these (108 organisations) can get quite emotional about this subject,’ he said.
The news exposure drafts have caused particular umbrage to many of the banks, in particular the new requirements on impairment loss provisioning, the reshaping of loan accounting and changes in the definition of cost.
Paul Chisnall, director of the British Bankers Association, said: ‘We are deeply concerned by key aspects of IAS 32 and IAS 39 and believe that the (IASB) needs to accept that these standards are seriously flawed and require considerable further work.’
Chisnall added that he believed that ‘few banks in the UK could implement IAS 39 within a reasonable time frame or at an acceptable cost.’
However opposition to proposals in the standards has come from many areas. All of the Big Four firms have expressed reservations over certain aspects. In its response to the IASB, PricewaterhouseCoopers said that ‘there are a number of fundamental problems with the standard that have not yet been addressed.’ Ernst & Young meanwhile said: ‘We do not believe that the exposure draft has made nearly enough progress towards either reducing the complexities of the standards or providing greater clarity on how they should be applied in practice.’
Doubts are also emerging from the accountancy institutes, with the ICAEW commenting that ‘there is a significant need for field testing in the short period between now and the revised standards being published, particularly in the areas of derivatives on own shares and for recognition and derecognition.’
Additional reporting by Adriana Zea.