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Wednesday, 17th April 2024
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Industry welcomes approval of IAS 39, but concerns remain Back  
The decision taken on November 19th by the European Commission to adopt a regulation endorsing IAS 39 has been welcomed by the Irish financial reporting industry, as it brings to a close one stage in this long-drawn out process.
TThe standard was approved with a ‘carve-out’ approach for hedge accounting and the fair value option at the behest of the European Central Bank and the banking community in Europe. The introduction of IFRS for listed companies becomes live on January 1st next year.

According to Brendan Sheridan, director of financial reporting services with Deloitte, it is expected that the International Accounting Standards Board (IASB) will adopt improvements in both hedge accounting and the fair value accounting by Autumn 2005 and that, all other things being equal, it will move to endorse these improvements as soon as possible thereafter. Accordingly, IAS 39 should be endorsed in full at that stage.

Although the Institute of Chartered Accountants in Ireland (ICAI) has welcomed the decision as providing some clarity on the operation of the standard for now, it says that the ‘carved out’ option should only have a short shelf life.

Apart from the uncertainty caused by this carve-out option, Sheridan says that there are still open questions regarding the application of IAS39. These concern such matters as the position being taken by Ireland’s current standard-setter, the Accounting Standards Board (ASB), the implications for first-time adopters and the approval of the full standard in due course. Moreover, according to ICAI President, Terence O’Rourke, in Ireland further guidance is required from the Revenue Commissioners on the implications of the new standards for the tax base. ‘We require final clarification by way of statutory instrument from Government as to how the new regime is to be applied,’ he says.

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