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We have agreed that the accounting standard setters should improve standards for the valuation of financial instruments based on their liquidity and investors’ holding horizons, while reaffirming the framework of fair value accounting.
We also welcome the FSF recommendations on procyclicality that address accounting issues. We have agreed that accounting standard setters should take action by the end of 2009 to:
Ø reduce the complexity of accounting standards for financial instruments;
Ø strengthen accounting recognition of loan-loss provisions by incorporating a broader range of credit information;
Ø improve accounting standards for provisioning, off-balance sheet exposures and valuation uncertainty;
Ø achieve clarity and consistency in the application of valuation standards internationally, working with supervisors;
Ø make significant progress towards a single set of high quality global accounting standards; and,
Ø within the framework of the independent accounting standard setting process, improve involvement of stakeholders, including prudential regulators and emerging markets, through the IASB’s constitutional review.
Full G20 declaration on strengthening the financial system