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Summary of 9 July 2004 ARC meeting

Jul 30, 2004

The Accounting Regulatory Committee of the European Commission met on 9 July 2004 to discuss the possible endorsement of IAS 32 and IAS 39 for use in Europe.

We have previously posted reports from the meeting, including the possibility of "carving out" some paragraphs of IAS 39 dealing with hedge accounting and the fair value option. The official (PDF 197k) of the meeting has now been released by the European Commission. Notes relating to the "carve-out" include the following:

The Chairman asked the Member States for their initial reactions in particular on a possible Commission proposal on a partial endorsement of IAS 39:

  • Many Member States adopted a very positive stance vis-a-vis a possible Commission proposal to adopt IAS 39 with the exception of the fair value option and of certain provisions relating to hedge accounting. Whilst a significant number of Member States were in favour of the Commission proposal, they needed more time and information to evaluate the suggestion properly....
  • Many Member States in favour of full endorsement indicated nevertheless their willingness to find constructive solutions and hence their readiness to examine a possible intermediate solution as sketched out by the Commission.
  • A few Member States maintained their strong preference for full endorsement of IAS 39 and rallied to an alternative proposal put forward by one of them that would consist of endorsing IAS 39 while granting Member States the possibility to disapply collectively or individually some of the provisions of IAS 39. This alternative did not attract much support and was opposed by some other Member States on the ground that it would lead to discrepancy in financial reporting throughout the EU and be contradictory to the objective of harmonisation sought after through the IAS Regulation....
  • Five Member States were not in a position to offer a view, as they had not yet completed their domestic consultations on the Commission proposal. Three Member States were not represented at the meeting.
  • A significant number of Member States insisted on the importance of allowing the full application of IAS 39 by companies that would wish to do so.

The ARC will meet next on 8 September 2004 to consider endorsement of IAS 39.