Convergence in international accounting standards should not come at the expense of high-quality accounting standards, she said and underlined her concern that FASB and IASB are still far from reaching a consensus on key accounting concepts.
Speaking at the colloquium “La juste valeur dans tous ses Etats” in Paris, Gertrude Tumpel-Gugerell ,Member of the Executive Board of the ECB, presented the main lines of intervention on accounting issues.
Convergence in international accounting standards should not come at the expense of high-quality accounting standards, she said and underlined her concern that FASB and IASB are still far from reaching a consensus on key accounting concepts. Fair value measurement should only be required if it is consistent with the institution’s business model and the characteristics of the particular underlying asset or liability, she underlined and called for a more forward-looking provisioning methodology.
The IASB has confirmed a “mixed measurement model” that measures financial instruments both at amortised cost and fair value. In contrast, the US standard setter, the FASB, is determined to move towards a “full fair value model”, claiming that only fair value provides decision-useful information to investors.
But Gertrude stressed that when markets are dislocated; applying full fair value accounting to the financial statements of the banking sector raises financial stability concerns and does not provide decision-useful information to investors.
She concluded by saying that the OTC derivatives markets should be subjects to greater transparency by promoting the reporting of non-centralised trades to trade repositories. It should also be promoted the clearing of eligible OTC derivatives transactions through central counterparties, which should be themselves subject to high prudential and operational standards.
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