19 November 2008

CESR feedback statement on fair value accounting

Respondents considered that CESR should not issue its own application guidance. In particular, some auditors felt that the guidance provided in the Consultation Paper edges on the border of being interpretative.

CESR issued its feedback statement on fair value measurement and related disclosures of financial instruments in illiquid markets. Respondents to the consultation paper generally agreed with CESR statements. However, they also considered that CESR should not issue its own application guidance on the matters discussed in the paper. In particular, some auditors felt that the guidance provided in the Consultation Paper on IAS 1, IAS 39 and IFRS 7 edges on the border of being interpretative.

 

Auditors, accounting experts and many banks consider that the IASB should be the body that first responds to the accounting issues arising as a result of the turmoil and underlined that the consultation paper should not provide separate guidance.

 

These concerns, however, was not shared by investors. CESR’s initiative was welcomed as it was pointed out that regulatory bodies clearly have a role in encouraging and enforcing best practice financial reporting and enforce the requirements for it.

 

From the banking side, it was also accepted that CESR has a role in reminding the issuers of securities of their obligations under the Transparency and Market Abuse Directives and acknowledged that Ecofin has directed CESR to conduct work in this area.

 

CESR members’ view is that the publication of this statement does not contradict its current policy of not issuing general application guidance on IFRS. CESR’s initiative should be interpreted in the context of the current financial turmoil and the ECOFIN’s request.

 

CESR agrees that the views of the securities supervisors of the European Union should be taken into account by the IASB and has therefore expanded the objectives of its Statement to include explicitly input the IASB work as a goal of the paper.

 

Feedback statement

 

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