KUALA LUMPUR: The Association of Certified Chartered Accountants (ACCA) has come out in support of a Malaysian decision to adopt an accounting standard that makes it mandatory for publicly listed companies to value financial instruments in their books according to fair market value.
ACCA global president Richard Aitken-Davies said the adoption of International Accounting Standard 39 (IAS 39) — accounting for financial instruments — would better reflect the globalised nature of the world’s economy, and, if properly implemented, could provide greater risk disclosure.
“We (ACCA) support the standard and in fact, there was a lot of pressure on the International Accounting Standards Board (IASB) to abandon the fair value mark-to-market for this type of asset or liability,” he told The Edge Financial Daily.
“We resisted that. We believe that the concept of fair value is essentially right because what it does is give investors and other stakeholders an assessment at a certain point in time what their assets and liabilities are.
“What fair value tries to do is to record what’s happened in the organisation and give an indication as to what that means for the future of the company. Fair value, properly implemented, gives enhanced information to people who have invested in the company and to people who may want to invest in the company.”
Presently, only financial institutions in Malaysia are required to mark to market the financial instruments in their books. By 2010, all publicly listed companies would be required to adopt IAS 39 in line with the country’s efforts to fully adopt IAS.
However, not everyone is happy with the proposal. Critics argue that the implementation of IAS 39 might aggravate volatility in markets because otherwise healthy companies would be required to write down bad assets in their books.
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1 comment:
Yup, yup...agreed....
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