A group of advisers to the European Commission has proposed in a controversial vote that the EU executive accepts a hotly-disputed standard on financial instruments that has been criticised by European banks.
The 11-member council of the European Financial Reporting Advisory Group (EFRAG) on Friday voted by six to five against recommending standard IAS 39, but failed to reach the required two-thirds majority to reject the new rule.
The rule was thus backed even though a majority of experts disliked it, a decision that sends a mixed signal to the EU Commission, which has the ultimate word on endorsement.
French and Italian committee members voted against IAS 39, reflecting national fears the new rule would lead to greater volatility in accounts by forcing banks to book derivatives at market value rather than historical costs.
In a previous vote on IAS 39 last year, EFRAG rejected the standard, reflecting its contentious nature.
The Commission, charged with vetting the bookkeeping rules, has endorsed all existing IAS rules except IAS 32 and 39.
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