LONDON (HedgeWorld.com)–The International Swaps and Derivatives Association, commenting on a draft recommendation by European regulators for a transition to continent-wide financial accounting standards, cautioned that disclosures of specifics regarding a firm’s transition should not be mandated.
“The timing of the provision and the format of such information is better left to the individual firms,” ISDA stated.
The new standards are known as the International Financial Reporting Standards, and they would serve as a Europe-wide substitute for various local generally accepting accounting practices. Two aspects of IFRS that concern participants in the privately negotiated derivatives industry are International Accounting Standards 32 and 39.
IAS 32 requires a broad range of disclosures about derivatives, including information as to their fair value.
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IAS 39 establishes conditions for determining when control over a derivative has been transferred to another party and subsequently can be taken off the books of the party transferring control.
In October, the Committee for European Securities Regulators issued its “Draft Recommendations for Additional Guidance Regarding the Transition to IFRS.” The CESR said then that approximately 7,000 listed companies within the European Union will have to make significant changes in their presentation of financial data by 2005, and it proposed a transition in steps.