EU Compromises on IAS 39
On 8 September 2004 EU Member States accepted the recommendations of the EU's Accounting Regulatory Committee to only partially endorse the introduction of proposals on financial reporting standards on derivative contracts, known as IAS 39. Some argue, this development could jeopardise an attempt to converge EU accounting standards with those in the US. In August 2004, The UK Institute of Chartered Accountants warned the Commission that partial implementation of IAS 39 would have adverse consequences for the credibility and quality of financial reporting in Europe.
The EU Commission formerly confirmed this position in November 2004. From 1 January 2005, 7000 listed companies will adopt new international accounting standards.This will have a major impact on business.
Banks and insurers in Europe had feared greater volatility in their balance sheets as a result of some of the new and proposed financial IAS 39 reporting rules from the International Accounting Standards Board (IASB).The changes related to the reporting of derivative contracts under International Accounting Standard 39 (IAS 39)and IAS 32.The IASB had wished to see derivative contracts valued at fair or market value in financial statements.The EU Commission will now endorse in November the provisions of IAS 39 minus the fair value option and the sections on core deposits.
These graphics deal with the issues associated with the proposed introduction of the revised IAS standards from 1 January 2005. There are many other graphics dealing with Financial Reporting matters.
See Paul Cummins' article dated 10 January 2005 on the UK Financial Reporting Council Strategy for 2005