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Tweedie warns Europe the IASB will stick to IAS 39 plans

International Accounting Standards Board (IASB) chair David Tweedie has told European finance ministers the board will stick to its current plans to address impairment and reclassification out of fair value rules as part of a comprehensive review of IAS 39. Initial reports indicate the ministers have accepted this assurance.

Tweedie was called before a European Union Council of Economic and Financial Affairs (Ecofin) meeting in Luxembourg this month to explain how the IASB is addressing what Ecofin called “potential competitive distortions generated by recent changes in US accounting regulation”.

The US Financial Accounting Standards Board (FASB) rushed through changes to US GAAP, relating to fair value accounting and recognition of impairment losses on financial assets, in April. Ecofin said the changes raised concerns about possible distortions to the level playing field for European entities and questioned why the IASB would not follow the FASB’s lead in making rushed changes.

Tweedie told Ecofin that the IASB has already sped up and restructured its review of IAS 39 in response to European concerns.

The section of IAS 39 that addresses classification, measurement and related impairment issues is being addressed first. An exposure draft on this section will be released in July and a final standard will be ready for use for 2009 financial statements.

Tweedie told Ecofin that this approach is superior to the option of adopting the FASB staff position on impairment because the IASB’s work on impairment directly addresses the specific nature of EU concerns.

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