Klumpes, Paul John Marcel

Welch, Peter

English

Following the financial crisis, the application of fair value accounting to banks’ financial reporting has received considerableattention. Despite this controversial practice, this paper suggests that an important aspect of fair value accounting hasbeen neglected. This paper argues that the complex framework under IFRS governing the reporting of fair value gainsand losses impairs the ability of ordinary investors to understand the impact of such gains and losses on banks’ reportedincome. It reviews the accounting framework, including both the October 2008 relaxation of reclassification options underthe existing IAS 39 standard, and the IASB’s phased replacement of IAS 39 with IFRS 9. This paper draws on the recentfinancial statements of large U.K. banks to illustrate the complexities. The paper concludes that IFRS 9 brings welcomesimplification. However, the new standard reinforces the place of fair value measurement in banks’ financial reporting andstill leaves obstacles to understanding the impact of fair value movements on banks’ reported income

Enhancing the Transparency of Bank Fair Value Reporting

https://vbn.aau.dk/files/461442188/Capco_Journal_30_WebbankFV_transparency_PK.pdf

Enhancing the Transparency of Bank Fair Value Reporting

Abstract

Similar works

Full text

Available Versions

VBN