The International Accounting Standards
Board’s (IASB) timetable for improving accounting for financial
instruments classification and measurement is challenging, and it
may not be practical to apply the standard for this year-end,
according to Institute of Chartered Accountants in England and
Wales financial services faculty head Iain Coke.

The IASB has published a draft standard that
represents the first of three phases of a comprehensive review of
IAS 39 Financial Instruments: Recognition and Measurement.

The project was split into phases to meet
demands from European banks and the EC for new classification and
measurement rules in time for the preparation of 2009 year-end
financial statements.

The other two phases, which address impairment
methodology and hedge accounting, are scheduled for completion in
2010.

Comments on the phase one draft are due by 14
September, which is a shorter than the usual consultation
period.

Coke said it will take stakeholders at least
the two months scheduled for the consultation to assess the
possible implications of the proposals.

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These implications could then change when the
proposals for the second and third stages of the IAS 39 review are
published.

2009 application

Coke also questioned how practical it
will be for anyone to apply the standard for this year end.

“You will need to restate last year’s
information, so it will take companies some time to get the data
and the information they need,” he said. “I think those who have
been pushing for amendments will find it challenging to implement,
they may run the risk that they need to adjust their accounting
again so they ought to think carefully about whether early adoption
is a good thing and consider both the short term implications and
longer term ones.”

Despite the rushed process, Coke said it is
still possible a robust, workable standard will emerge.

Mandatory application will not be before
January 2012.