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ICAJ
MEETS SECURITIES DEALERS TO DISCUSS IAS
CONCERNS
A
team from the ICAJ, led by President Garth
Kiddoe and comprising members of Council
and the Accounting Standards Committee,
met with representatives of the Jamaica
Securities Dealers Association to discuss
the implementation of IAS 39 (Financial
Instruments: Recognition and Measurement)
and its impact on the local securities
dealers industry.
The meeting, which was held
at the ICAJ Secretariat, was attended
by Mr Peter Chin, President of the Jamaica
Securities Dealers Association and representatives
from Jamaica Money Market Brokers, Bank
of Nova Scotia, Citibank and Pan Caribbean
Merchant Bank.
ICAJ adopted IAS on July
1, 2002 concurrently with International
Standards on Auditing (ISA) as Jamaica’s
national accounting and auditing standards.
The implementation of IAS locally is consistent
with increasing trends toward the harmonisation
of accounting and auditing standards worldwide
and is also important for the promotion
of transparency and confidence in financial
reporting, especially, to foreign investors.
Among the concerns put forward
by the Securities Dealers for discussion
at the meeting were:
- The need for more public
education on fair valuing and its impact
on financial performance.
- The need for an infrastructure
that supports an appropriate pricing
mechanism for industry use and
- The timing and volatility
of implementing IAS 39 at this time.
Since 2000, the ICAJ
has been preparing the business community,
regulators and its membership for the
transition to IAS. This included presentations
and workshops targeting various interest
groups such as the PSOJ, the Jamaica Chamber
of Commerce, the Jamaica Stock Exchange
and the general membership of the ICAJ
to sensitise them about the new standards
and how they impact the reporting environment.
It was accepted at the
meeting that further public education
should be carried out to assist financial
analysts. It was further agreed that individual
public companies should seek to educate
shareholders about the changes in the
environment and the approach to investments,
which they ought to be taking in view
of the pending improvements in financial
reporting.
It was also recognised
that the financial sector has been experiencing
difficulties in identifying generally
acceptable methods for determining the
fair value of financial instruments in
the absence of a well-developed financial
market. In this regard, the assistance
of an international data service provider,
in establishing an appropriate pricing
mechanism for use locally, is being sought.
It was also agreed that
the implementation of IAS does not in
itself contribute to any volatility that
may exist in the financial market but
that the new standards will require greater
disclosure, by affected companies, of
changes in value that have occurred in
their portfolio holdings as a result of
genuine market movements. The Securities
Dealers have committed to:
- Review options identified
for establishing an appropriate infrastructure
for the pricing of financial instruments;
- Develop proposals to
address the problem of volatility in
the financial markets as it affects
reported earnings and
- Develop a public education
programme to be co-ordinated jointly
with the Institute and targeting mainly
financial analysts and other affected
stakeholders.
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