30 June 2004

FEE Position on IAS 32 and IAS 39

The European Federation of Accountants (FEE) has responded to EFRAG's draft endorsement advice on amended IAS 32 and to EFRAG's draft adoption advice on the amended IAS 39. FEE is aware that the IAS 39 standard is complex and controversial, particularly in the area of hedge accounting. However, the introduction of the fair value hedge accounting model for a portfolio hedge of interest rate risk provides much welcomed flexibility in implementation.

According to FEE, IAS 39 will probably introduce some volatility in reported equity of financial institutions. However, the standard is sufficiently robust to form a basis for reporting on financial instruments and should accordingly be adopted for use in Europe.

With regard to the classification of partnership capital in IAS 32, the situation is acceptable in the short term but needs to be taken into consideration in a future revision of IAS 32.

FEE stresses the importance of adopting IAS 32 regardless of the decision taken in relation to the adoption of IAS 39.

Representative organisation for the accountancy profession in Europe
www.fee.be',WIDTH, 300, SHADOW, true, FADEIN, 300, FADEOUT, 300, STICKY, 1,DURATION,3500)" onmouseout="UnTip()");">FEE 040630 Draft Advice amended IAS 39.pdf ' target='_blank'>FEE response to IAS 39
Representative organisation for the accountancy profession in Europe
www.fee.be',WIDTH, 300, SHADOW, true, FADEIN, 300, FADEOUT, 300, STICKY, 1,DURATION,3500)" onmouseout="UnTip()");">FEE 040630 Draft Advice IAS 32.pdf' target='_blank'> FEE response to IAS 32

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