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Accounting Standards

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The question also arises as to whether IFRS 9 will retain its current requirements even in the short term. The US standard setter, the Financial Accounting Standards Board, is also undertaking a concurrent project on financial instruments and the IASB has acknowledged that this will see further changes to IFRS 9 before its mandatory application date. The treatment of financial liabilities also remains a contentious area and was dropped from IFRS 9 very late in the process.
“The IASB has grappled with the concept of how an entity’s own credit risk should impact the measurement of liabilities. The idea that an entity should make a gain from a decline in its own credit worthiness has been the source of much debate.”
The IASB is concurrently considering other issues in financial instrument accounting, particularly hedging and impairment.
Ms Hankey noted: “The unfinished business in financial instrument accounting is likely to meet significant resistance from preparers – again the challenge for the IASB is to develop a principle-based accounting framework reflecting commercial realities.”
So what does this mean for global accounting standard setting?
“The current uncertainty in global accounting standard setting is very unhelpful to preparers trying to plan for the future and take advantage of the promise of a single set of high quality accounting standards,” said Ms Hankey.
“The IASB should survive this current challenge, but it may be wounded and the push towards global accounting standard setting may well suffer. Our clients are looking for simplicity, certainty, consistency with the commercial substance of transactions and events and global consistency. IFRS 9 is a first step in the long process of rewriting the accounting rules for financial instruments.”

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