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IASB pushes fair value proposal
07-16-2009, 07:17 PM,
IASB pushes fair value proposal
<i><b>Standard setter acts on IAS 39</b></i>
15 July 2009 <i>Emily Beattie</i>

Following calls to improve accounting for financial instruments, after the banking crisis has pushed the need for transparency and reduced complexity of financial statements higher up the agenda, the international accounting standard setter has issued a draft proposal.

The proposal concerns how financial instruments are classified and measured (IAS 39) and intends to give banks more scope in how they report financial assets. But the principle is that they value them at current market prices where it can be done.

Fair value accounting has come under scrutiny for its role in the banking crisis, and the International Accounting Standards Board is under political pressure both at home and from the US to ease the mark-to-market accounting rules.

Sir David Tweedie, chairman of the IASB, said 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. Making it easier for investors to understand financial statements is an essential ingredient to the recovery of investor confidence.

The proposals today are an important first step in this process. They also respond directly to concerns raised about the accounting for financial instruments. In finalising these proposals we will continue to work jointly with the US standard-setter, the Financial Accounting Standards Board, to achieve a common and improved accounting standard on financial instruments.

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