Brussels, 16/11/2005 (Agence Europe) - On 15 November, the European Commission adopted a Regulation endorsing the amended International Accounting Standard (IAS) N° 39 on Financial Instruments: Recognition and Measurement, the “Fair Value Option”. The regulation was unanimously supported by Member States on the Accounting Regulatory Committee and by the European Parliament (see EUROPE 8992). Adoption is retroactive to 1st January 2005, so that companies will be able to apply the amended standard for their 2005 financial statements. In accordance with the wishes of the European Parliament the Commission will review the implementation of IAS 39 and report on this to Parliament as an integral part of its evaluation of the operation of the IAS Regulation by the summer of 2007. Internal Market and Services Commissioner Charlie McCreevy said: “I am very pleased that the Commission has been able to eliminate the 'Fair Value carve-out' to IAS 39. The two IAS 39 carve-outs were always intended to be exceptional and temporary. We therefore need to press on with the technical work to find a solution on the second carve out.”
The Regulation also carves back in the text that was previously carved out from the original IAS 39 standard, thus eliminating the fair value carve-out. The Commission is examining, in conjunction with Parliament and Member States, whether in the light of the adoption of the amended fair value standard, consequential amendments should also be made to the existing accounting directives. The carve-out on hedge accounting remains excluded. As regards the removal of the carve-out relating to certain hedge accounting provisions, the Commission again emphasises the need for the European Banking Federation and the IASB to find an appropriate technical solution as rapidly as possible. In the interim, those individual companies wishing to apply the 'carved out' hedge accounting provisions may do so because there is no existing EU law on this issue. For such companies the second carve out plays no role. The European Commission and US Securities and Exchange Commission have adopted a roadmap to lead to recognise the equivalence of IFRS and US GAAP by 2009 (see EUROPE 8934).