The two guidance documents, "IAS 39 Implementation Guidance -- Questions and Answers," and "Fourth Batch of Proposed IAS 39 Implementation Guidance -- Questions and Answers," are available for viewing and downloading on the IASC Web site at http://www.iasc.org.uk. Comments on the Q&A should be submitted in writing by Nov. 15.

IAS 39, the IASC's first comprehensive standard on the subject, "establishes principles for recognizing, measuring, and disclosing information about financial assets and financial liabilities, including derivatives," IASC said. IAS 39 is effective for financial statements for financial years beginning on or after Jan. 1, 2001.

"IAS 39 significantly affects corporate financial reporting by establishing for the first time a single set of rigorous and consistent principles for recognizing and measuring financial instruments under IASC standards," said John T. Smith, chairman of the IAS 39 Implementation Guidance Committee and a partner of Deloitte & Touche. "The IAS 39 implementation guidance issued today helps companies, auditors, and financial analysts better understand and apply the requirements in IAS 39, and helps companies implement this new approach to financial instruments consistently and effectively."

"IAS 39 introduces a whole new approach to the accounting for trading, investment, and hedging activities involving financial instruments," added James S. Saloman, technical director of IASC. "Therefore, it is not surprising that companies and their auditors have a lot of questions on how to best and most effectively implement IAS 39."

The IAS 39 implementation guidance was prepared by the IASC staff and approved by the IAS 39 Implementation Guidance Committee, which was established by the IASC Board. Members and observers on the IGC are experts in financial instruments with backgrounds as accounting standard-setters, auditors, bankers, and banking and securities regulators.

Issues addressed in the IAS 39 implementation guidance include: the application of IAS 39 to financial reinsurance contracts, credit derivatives, financial guarantee contracts, and commodity contracts; definitions of derivatives and originated loans; accounting for embedded derivatives; accounting for "regular way" transactions; accounting for transfers of financial assets and portions of financial assets; accounting for transaction costs; fair value measurement considerations; application of the effective interest method; classification of financial assets as held to maturity; impairment issues; hedge accounting issues; disclosures about financial instruments; application of the transition requirements in IAS 39; and the interaction between IAS 39 and other International Accounting Standards, IASC said.

-- SmartPros News Staff

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