In his letter, Chris Lucas criticises the “fair value accounting of own debt” which boosted the third-quarter results of several major banks, including Barclays, because the gain is based on the deteriorating market value of debt, a price at which a bank could theoretically buy back the debt.
Mr Lucas claims that these unresolved flaws in the IAS 39, “It makes results difficult to explain to investors and is unhelpful for an industry that wants to rebuild confidence through transparency in financial reporting.”
He goes on in his letter to urge stakeholders to amend IAS 39, saying this will "improve investor confidence and increase transparency in financial reporting by banks.”
IASB, the Standard Setter, is working on new rules, but they are proving controversial and the task is further complicated by attempts to coordinate with US equivalent the FASB.
For more information, please visit www.milsted-langdon.co.uk
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