Your helpful article (Call to arms over fair value, page 3, 19 July) very usefully drew attention to the ICAEW’s concerns regarding the scope of the discussion paper, Financial Instruments and Similar Items, issued by the joint working group of international standard setters.
The proposals would mark a radical shift in accounting. For instance, the requirement to use ‘fair values’ in accounting for financial instruments would mean that fixed-rate loans would have to be ‘revalued’ at each year end.
Since the proposals are intended to apply to companies of all sizes, this could lead to great confusion for many users of accounts. Whilst the institute is, in principle, broadly supportive of measuring financial instruments at fair value, there are a number of major reservations regarding the current proposals; the scope of their application is just one of them.
The response period for the Accounting Standards Board in the UK is now closed but comments may still be submitted to the International Accounting Standards Board itself, up to 30 September. The institute is hosting a major discussion forum on 13 September. I urge smaller practitioners to attend, to provide an opportunity to understand and influence this very important debate (details from susie. email@example.com).
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