Financial Accounting Blog

Wednesday, June 16, 2004

Global Accounting Standards. Four European Nations have rejected the latest version of the international accounting rule on derivatives. With a target of January to pass a full package of accounting standards starting to look doubtful, four European Nations rejected the compromise rule that would require investments in derivative securities to be measured by their market value as opposed to their historical cost which is likely to cause volatility in financial statements.
The derivatives rule is part of a set of global accounting standards, called International Financial Reporting Standards, being promoted by the International Accounting Standards Board. The separate accounting rules of each European country are set to be replaced in 2005. The idea behind uniform, stricter standards is to avoid the corporate corruption scandals seen in the U.S., and to harmonize U.S. and European rules.