IASB pressing forward without FASB to revise financial instrument standard

International Accounting Standards Board (IASB) Chairman Sir David Tweedie promised to deliver on his promise to revise International Accounting Standard (IAS) 39 Financial Instruments by the end of this year. “We will publish the new standard in November,” Tweedie said at a meeting of the European Finance Ministers.

The G20 Finance Ministers this summer challenged the IASB and FASB to “reduce the complexity of accounting standards for financial instruments.” The IASB is moving forward on this objective and giving companies more flexibility to use historical cost in valuing financial instruments rather than requiring them to use fair value measurement.

Unlike the IASB, FASB is expected to expand fair value accounting and encompass loans as well as financial instruments and assets such as mortgage-backed securities. Tweedie, however, acknowledged that the IASB will not be doing so, saying, “Let me state clearly: the IASB will not require that the loan book of banks be held at fair value.”

Despite differences, Tweedie said the IASB is still committed to working with FASB to develop a single set of high-quality, global standards. “Next week, we will meet the FASB to seek to agree an approach leading to a common international standard on financial instruments,” Tweedie said. “While it may have been preferable to have had common timelines with the FASB on financial instruments, the IASB believed that the commitment made to this Council and the conclusion of the G20 overrode this timing consideration.”

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