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New accounting standard to simplify financial asset reporting
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Sanchia Temkin
Business Day
Thursday, January 21, 2010
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A new accounting standard being drawn up is intended to simplify the reporting of financial instruments.
The global economic downturn, compounded by political interference, led to the International Accounting Standards Board agreeing to a complete revision of standards on accounting for financial instruments.
Sue Ludolph, project director of accounting at the South African Institute of Chartered Accountants, said yesterday the aim of the board was to replace the IAS 39 (AC133), an international accounting standard, with a new standard (IFRS 9) dealing only with financial assets.
This would be done in three phases, she said, with the last phase due to materialise by the end of the year.
The first phase specifies how an entity should classify and measure financial assets, including some hybrid contracts.
The board was also working on when, and when not, to re-recognise financial instruments from the statement of the financial position; and on revising the consolidation standard.
The proposed changes would result in many more “off balance sheet” structures brought “on balance sheet”, Ludolph said.
Another requirement was removing inconsistencies between the US’s Generally Accepted Accounting Practice and international financial reporting standards, she said.
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