International accounting rule setter speeds up reform of fair value system

A TOP international accounting standards setter yesterday agreed to speed up the revision of a rule criticised by European Union (EU) finance ministers for amplifying fallout from the credit crunch.<br /><br />The International Accounting Standards Board ( IASB ), which sets financial reporting rules used in more than 100 countries around the globe, including the EU took the decision at a board meeting that ended on Thursday.<br /><br />&ldquo;It&rsquo;s true we are trying to be responsive to them to get something urgent, but what we are focussing on is the G20 request to reduce complexity by year-end,&rdquo; IASB board member John Smith&nbsp;said.<br /><br />He added the July draft would look at the classification and measurement of assets.<br /><br />A second document would follow later in the year on impairment and provisioning, with the final document thereafter on hedging.<br /><br />The IASB had planned to publish a draft overhaul of its IAS39 rule that deals with fair value and mark-to-market in October.<br /><br />This timetable is too slow for the EU&rsquo;s executive European Commission which wants changes in place in time for when banks compile their 2009 annual reports.<br /><br />The existing rule forces banks to value complex assets at current depressed market prices, resulting in huge write-downs that have unnerved investors.<br /><br />Earlier this week the IASB appointed two leading investment analysts &ndash; Patrick Finnegan and Patricia McConnell &ndash; to replace two retiring members.