The Accounting Standards Board (ASB) has issued a this statement on the implications for UK financial reporting of the modified version of IAS 39 proposed by the European Commission.
On October 1, 2004 the EU voted to adopt as a version of IAS 39 that has been amended by the European Commission rather than the unamended IAS 39 as published by the IASB. This decision raises important issues both for companies in the UK.
The implications of the EU's decision for entities reporting under EU-adopted international accounting standards are not straightforward, says Ian Mackintosh, ASB Chairman.
?The position the EU has reached on adoption of IAS 39 is unsatisfactory. The adopted standard includes seriously weakened hedge accounting requirements and may give rise to artificial volatility in reported profits and difficulties in application as a result of limiting the fair value option.
?There is also considerable uncertainty over the application of the adopted standard and its relationship to EU law, and those UK companies that will be applying international standards now have little time to address these difficult issues in order to implement the standard for 2005.