The ACT Supports IAS 39 on Financial Instruments - Letter to the IASB

I write following our recent meeting and correspondence with yourself and Wayne Upton.
The ACT recognises that IAS 39 addresses a very complex area. The ACT has long supported the concept of marking to market for many types of financial assets and liabilities and the need for there to be good criteria for application of hedge accounting in company accounts.

We also accept that given limits of time and resource a standard like IAS 39 will not be able to reflect all parties’ needs from the outset.

From the point of view of treasury operations in non-financial corporations the principal area remaining outstanding in IAS 39 is that of the practice of treasury-centre net hedging of forecast currency exposures. Foreign exchange is, of course, the main area of financial price risk where corporations may face offsetting exposures, thereby permitting netting.