January 28, 2010 / 7:21 PM / 10 years ago

IASB plans no fair value changes for EU-chairman

* IASB foresees no ‘fair value’ rule change on EU demands

* Chairman says mark-to-market best to value instruments

* IASB hopes U.S. to adopt international rules

SAO PAULO, Jan 28 (Reuters) - The International Accounting Standards Board (IASB) will not change fair value rules based solely on demands from the European Union, IASB Chairman David Tweedie said on Thursday.

The IASB recently adopted changes to the fair value rule that some EU finance ministers criticized for increasing the impact of the credit crunch on banks.

“We can’t keep changing (the accounting rules) for one particular part of the world... We cannot always allow Europe to tell us what to do. This is global. We are the IASB, not the European accounting standard board,” Tweedie told reporters in Brazil’s financial hub of Sao Paulo.

Tweedie said mark-to-market accounting was the best way to stablish the fair value of financial instruments when a bank can’t account for cash flow.

“The market is probably the best assessment of what the present value of those instruments are. That’s the new standard. Some in Europe say, ‘We think it’s too much for fair value.’ Our assessments throughout the world say that it is what the people want us to do,” he said.

Reform of the IASB’s fair value rule is being done in three stages. The board is consulting on the second stage, which will require banks to bring forward losses on loans much sooner.

During the crises, Tweedie added, “some banks ignored some of the evidence” of losses.

U.S. ENGAGEMENT

In the United States, the IASB has held talks with the Financial Accounting Standards Board (FASB) for years to bring international accounting rules close together.

“Ultimately, we have to speak for the international community. If we disagree with FASB, we have to do what we think is right,” Tweedie said. “We can’t converge at all costs. At present, they wish a much (less rigid concept of) fair value that we believe the rest of the world would accept or even think is appropriate.”

At the same time, he said he expects the U.S. Securities and Exchange Commission will produce a statement in the next few weeks saying what the United States will do about moving toward international accounting standards. “I think they will confirm they will make a decision next year.”

“We have all the major economies signing up for IFRS except the United States... I think if they decide they don’t want to use the standards, there will be a resistance in the world. I don’t think the United States wants to be isolated,” he said.

“Do you understand Chinese accounting? Do you understand Indian accounting? The answer is no. But you will when they use IFRS, and you will invest when you know where the answers are,” Tweedie added. (Reporting by Cesar Bianconi, editing by Elzio Barreto and Padraic Cassidy)

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