IASB plans no fair value changes for European Union

The International Accounting Standards Board (IASB) has said that it won’t change fair value rules based solely on demands coming from the European Union.

According to IASB Chairman David Tweedie, “We can't keep changing for one particular part of the world. We cannot always allow Europe to tell us what to do. This is global. We are the IASB, not the European accounting standard board.”

The European Union has recently criticized the IASB for adopting changes to the fair value rule that some believe has increased the impact of the credit crunch on banks. Tweedie contends that fair value accounting is the best way to establish the fair value of financial instruments when a bank can't account for cash flow.

While FASB and the IASB are heating up the convergence efforts of U.S. GAAP with IFRS, fair value continues to be a major obstacle. At a joint meeting held recently, FASB and the IASB have tentatively defined fair value as an exit price.

Tweedie has said, however, that he won’t converge at all costs. “Ultimately, we have to speak for the international community. If we disagree with FASB, we have to do what we think is right,” Tweedie said.

The IASB, along with interested parties around the world, wait for word from the SEC on a convergence plan for the U.S.  The SEC had previously indicated that they would release a new roadmap for a convergence of U.S. GAAP with IFRS before the end of 2009. However, that was pushed until early 2010.

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