Radical document 'falls off its horse.' (International Accounting Standards Committee's discussion paper on financial instruments)

Article Abstract:

The International Accounting Standards Committee's (IASC) much-lauded discussion paper on financial instruments is now being criticized for not taking a tougher stand on certain issues. Although the document was widely considered to be 'radical' and 'challenging' when it first came out, UK Accounting Standards Board Chmn Sir David Tweedie now describes the work as a 'bit of a cop-out.' He says chief author Alex Milburn made a very good job with the first six chapters, but failed to push the issues discussed toward their logical conclusion. Tweedie contends that standard-setting bodies should always take a firm position and soften only when it is absolutely necessary. For his part, Arthur Andersen partner John Stewart suggests that the IASC should seek the support of the analysts, credit-rating agencies and other users of financial statements.

Beliefs, opinions and attitudes, Tweedie, David

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Moving the problem

Article Abstract:

The UK Accounting Standards Board (ASB), the International Accounting Standards Committee (IASC) and the US Financial Accounting Standards Board (FASB) are all addressing the difficult issue of accounting for financial instruments. Both the ASB and the IASC have published discussion papers that examine the possibility of measuring interest-bearing assets and liabilities at fair value. The FASB has also introduced a draft standard that focuses only on derivatives and hedging, although it eventually wants to apply the fair-value measurement approach to all financial instruments. The draft standard requires the inclusion of derivatives in the balance sheet at fair value, as well as the inclusion of gains and losses in earnings. It is expected to be implemented starting Jun 2000.

Derivatives (Financial instruments), Hedging (Finance), Accounting Standards Board, Financial Accounting Standards Board

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Learn to play your instruments

Article Abstract:

International Accounting Standard (IAS) No. 32, 'Financial Instruments: Disclosure and Presentation' was introduced in June 1995 and will take effect for financial reports covering periods starting on or after Jan. 1, 1996. The new standard addresses some of the less contentious issues covered in the IAS exposure draft, E 48, 'Financial Instruments' proposed in 1994. IAS 32 requires issuers of financial instruments to categorize these instruments in terms of the substance of the transaction. If debt/equity compound instruments are issued, issuers are also mandated to allocate the proceeds of the issues between the equity rights element and the liability component. In addition, IAS 32 requires a comprehensive set of new disclosures.

Technology application, Disclosure statements (Accounting)

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