KARACHI, Feb 8: The stakeholders in the stock market who attended a meeting on Saturday to deliberate on the accounting treatment of decline in fair value of “available for sale investments” in quoted companies held the consensus view that the regulator be asked to suspend the implementation of International Accounting Standard (IAS) 39 for one year, several participants of the meeting confirmed on Sunday.

The meeting called by the Securities and Exchange Commission of Pakistan (SECP) was held between the Institute of Chartered Accountants of Pakistan (ICAP) and an entire spectrum of stakeholders.

Those included about 30 representatives of Pakistan Bankers’ Association; Investment Banks Association; Insurance Companies Association; Leasing Companies Association; the Stock Exchange and two former heads of KSE.

Stock broker-turned industrialist Arif Habib, who was among the participants, affirmed that there was no difference of opinion on that account. And chairman of Mutual Fund Association of Pakistan (Mufap) Najam Ali also endorsed that such was the case.

The SECP and possibly State Bank of Pakistan (SBP) are presumed to hand down their verdict on the issue on Monday.

The matter relates to IAS 39 (Para 58) which stipulates that the significant and prolonged slump in fair values of investments that result in ‘impairment’ ought to be recognised in Profit & Loss account rather than in equity through adjustment in revaluation surplus. But the industry was opposed to that view on the ground that the implications of the IAS would overshadow the robust operational performance of companies.

Arif Habib said that the request had been made because of ‘extraordinary’ circumstances in the year 2008, when the stock market melted away by record 66 per cent from its peak prices. The stakeholders asked that since the problem could be widespread with numerous companies heavily invested in equities, such as D.G. Khan Cement, Packages, Dawood Hercules, Habib Bank, MCB, ABL, NBP, BAFL and others, the decline in fair value of ‘available for sale investments’ in quoted companies should be allowed to be recognised by the companies directly in equity, instead of impairment loss through profit and loss account (P&L) as required by International Accounting Standard (IAS) 39: ‘Financial Instruments: Recognition and Measurement.’

The regulators were expected to announce their decision as early as on Monday, in the light of minutes of the Saturday meeting and observations of the SECP officials. The need for a quick decision stemmed from the fact that as the reporting season was passing by, most companies had put the finalisation of their financial statements and the conduct of Board meetings on the hold, pending the arrival of the verdict.

Meanwhile, Mufap chairman Najam Ali said that Mufap neither intended to nor was authorised to seek a legal recourse for any real or perceived disputes on matters such as these, where so many stakeholders were involved.