A FOURTH new standard has been published by the International Accounting Standards Board, in collaboration with its US equivalent the FASB.

IFRS 13 does not extend the use of fair value accounting, but rather, helps companies decide how it should be applied in cases where it is already required or permitted by existing IFRS or US GAAP standards.

It gives a precise definition of fair value and a single source of fair value measurement and disclosure requirements.

Fair value accounting made headlines during the financial crisis, as companies used it to estimate the value of assets for which there was no field of comparison. Questions were raised about the effect on companies' finances, as fluctuating markets made the value of assets swing wildly, with corresponding peaks and troughs on balance sheets.

The standard is intended to improve consistency and reduce complexity in fair value measurement, and both boards are heralding it as a significant milestone on the path towards convergence.

FASB chairman Leslie F Seidman said: "Having a consistent meaning of the term 'fair value' will improve the consistency of financial information around the world."

Julie Santoro, partner in KPMG's International Standards Group, welcomed the release, but indicated its significance lies more in clarification than in laying down new rules: "For many companies, the extent of assets and liabilities being measured at fair value is limited. Moreover, we see the fair value definition and guidance in IFRS 13 as being in many cases largely consistent with current practice in IFRS."

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