Saturday, April 26, 2008
FSF urges IASB to fix off balance sheet rules
'The use of off-balance sheet entities created a belief that risk did not lie with arrangers and led market participants to underestimate firms’ risk exposures' - FSF
Accounting standard setters have been urged to improve the accounting and disclosure standards for off-balance sheet vehicles on an accelerated basis and work with other standard setters toward international convergence.
The recommendations, from the global Financial Stability Forum which reviewed the issues that led up to the credit squeeze, were welcomed by the G7, who met in Washington on Saturday.
The FSF – which includes the International Monetary Fund and other financial and regulatory bodies – said that the build-up and subsequent revelation of significant off-balance sheet exposures highlighted the need for clarity about the treatment of these structures and the risks they posed to the institutions carrying them.
See full Article.