NJO=açêëÉí=oáëÉ= qÉä=HQQ=EMF=OM=TSVQ=USQM= =içåÇçå= c~ñ=HQQ=EMF=OM=TPNN=PPNN= =b`Qv=Ubk= au=PUMRM=_ä~ÅâÑêá~êë= =råáíÉÇ=háåÖÇçã= = ==== Sir David Tweedie Chairman Your ref International Accounting Standards Board 30 Cannon Street Our ref th London EC4M 6XH Contact Terry Harding 020 7694 8640 17 March 2003 IAS 32/39 Round Tables Many thanks for the opportunity to attend the Round Tables last week. We appreciate the time and effort that the Board and the Staff spent in preparing for the Round Tables and in listening to respondents’ views. Having observed a number of the sessions, I thought it might be helpful to set out a number of suggested amendments in the area of hedge accounting that we did not have time to explore fully at our session last week and that were not covered in our comment letter. We believe these may go some way to striking a balance that eases the implementation difficulties for banks and corporates without compromising the principles in the Standards. Prospective effectiveness assessment The requirement in IAS 39.146, that changes in the fair value or cash flows on the hedged item and the hedging instrument should be expected to ‘almost fully offset’, is regarded by many as unduly restrictive. We note the concerns of both banks and corporates that accounting rules should not drive their economic hedging strategies, and the assertion by banks that their risk management systems should be capable ...