Last week, the European Union deferred the adoption of the international accounting rule known as IFRS 9, the first part of the three-part financial-instruments. The EU refused to endorse the standard until its pan-European members got a look at the remaining pieces.
IFRS 9 deals with the classification and measurement of financial assets, while the other two parts, which are currently being worked on by the International Accounting Standards Board, concern hedge accounting and impairment of financial assets.
From a practical perspective, the temporary snub from the EU isn't earth shattering, although it does nix early adoption. The rule likely won't go into effect until 2013, and IASB expects to have the other parts completed by the end of 2010, the same time the U.S. Financial Accounting Standards Board plans to finish all three parts of its standard on financial instruments.
Some executives were disappointed at the EU's decision. In a letter to the Financial Times published today, Douglas Flint, CFO of banking giant HSBC, said the EU's decision was "regrettable, noting that"while IFRS 9 does not make things perfect, it does make them better."
Whatever your opinion of the new rule, this momentary blip may portend further politicization of the accounting standard-setting process -- if the past is any guide. Indeed, last year France's Nicolas Sarkozy and Germany's Andrea Merkel lent their voices to an EU threat that lawmakers would pass their own fair-value rules if IASB didn't hurry up and publish its version.
In the United States, two legislative proposals -- one from Colorado Democrat Rep. Ed Perlmutter, the other from California Republican Rep. Gary Miller -- aim to increase the level of federal oversight over FASB. Further, a move away from U.S. GAAP and to international standards is currently in the hands of a political appointee, as CFO.com's David Katz reports today. In the past, that has spelled trouble, considering that under former SEC Chair Christopher Cox the SEC strong-armed FASB to get more say over the appointment of board members.
The year ahead will produce several significant changes to accounting rules. Whether the non-so-invisible hand of politics will be pulling the strings is another story. |
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