03 July 2007

IMA points to solution of IFRS debate

The Investment Management Association has written to the European Commission to encourage convergence of accounting standards at the same time as pointing to a solution to allay the concerns that many, including IMA, have expressed on the proposed adoption of International Financial Reporting Standard 8.

The key issue that has created concern is that under IFRS 8 'segmental' reporting will be based on internal reports reviewed by the 'chief operating decision-maker', a concept which has not been defined. IMA believes, however, that these concerns can be addressed if it is made clear that, within the EU at least, this role is fulfilled by the Board, who in any case have oversight under EU Company Law Directives. It is therefore calling for guidance stating that the chief operating decision-maker in Europe is the Board. In addition, IMA supports use of the 'true and fair' override if it is necessary to ensure that the information reported reflects the true underlying performance.

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