Treasurers ‘extremely concerned’ by IASB rules

The International Group of Treasury Associations (IGTA) says IAS 39 should not be adopted unless two changes related to currency and interest rate hedging are made to the International Accounting Standards Board’s (IASB) rule.

In a statement released this week, IGTA – which co-ordinates activities and promotes dialogue between national treasury associations - said it is “extremely concerned” that the IASB has not addressed two particularly important issues for corporate treasurers.

The first relates to treasury centre netting of foreign currency hedging. According to IGTA, IASB’s rule will lead to significant additional costs and “leave companies reporting under IAS, notably in Europe, at asignificant disadvantage compared to their US GAAP reporting competitors”.

IGTA also said the IASB should support permitting a US GAAP (generally accepted accounting principles) approach for hedging with interest rate swaps, to “significantly ease the implementation burden for simple hedging strategies”.

While it was keen to stress its support for the underlying principles and general approach behind IAS 39, IGTA said the rule may cause some companies to cease hedging interest rate and currency risk, if not modified as suggested.

IAS 39 – the IASB’s mark-to-market accounting rule – is due to be adopted by European companies in January 2005.