Back in October 2008, the EC moved to change EU accounting rules to help banks avoid sharp drops in the values of their assets at times of market volatility, such as the present financial crisis. It was made by the EU accounting regulatory committee. It applied from 208 third quarter results. I dont think this is just for banks. to quote Business Week- "Under current mark to market rules, company assets are valued on the basis of the price they would fetch if they were offered for sale on the market right now istead of what they would fetch if they were held to maturation.
"Under the commissions new rules, banks and other companies can optionally classify assets from the "held for trading" category to the "held to maturity" category avoiding the trap".
"The rule change is in line with seperate moves earlier this week from the International Accounting Standards Board, which crafts accounting standards used in 100 countries".
Business Week -Europe, October 16 2008.
Now this would suggest to me that all these write downs of financial instruments such as derivatives by property trusts which were intended to be held to maturity anyway were quite unnecessary. Assets statements will therefore be un-necessarily low ball.
So why the orgy of write downs by Australian trusts? Are Australian accounting standards out of step? cannot AEZ use the european standard as the only Australian thing about it is its management and share register.
Anyone got any comments on this? (Informed that is...)
AEZ Price at posting:
6.8¢ Sentiment: None Disclosure: Held
