In compliance with G-20 requests, the international accounting standard-setter is moving 'swiftly' to implement a draft exposure to reform accounting rules that recognise and measure financial assets. In its exposure draft released for public consultation today, the International Accounting Standards Board (IASB) is proposing to replace the current IAS 39 accounting method that does not reflect any future expected credit losses on balance sheets with IFRS 9, Financial Instruments - one that does. The move aims to incorporate more transparency into financial reporting following the global economic crisis. Current accounting rules have been criticised by some in the sector for highlighting an overstatement of revenues when the economy is good, and hiding any problems that might arise when a downturn hits. Under the estimated cashflow approach, any future credit losses would need to be estimated from the moment a financial asset is first recognised, which would act as the basis for income recognition for the rest of the asset's life. Sir David Tweedie, chairman of the IASB, said that the standard-setter had 'moved swiftly' to be 'consistent with requests from the G-20 and others' to form the second part of its project in revamping accounting for financial instruments. 'Although moving to a single impairment model significantly reduces complexity, the challenges of applying an expected loss approach should not be underestimated. For this reason the IASB will tread carefully and seek input from a broad range of interests before deciding how to proceed,' he said. The consultation period is due to last for eight months, allowing organisations to consider the impact any such changes may have on them. It has established an Expert Advisory Panel, with experts in credit risk management inputting advice to the board. Andrew Vials, a partner in KPMG's international standards group, said the proposals are a 'key part' of the review of accounting for financial instruments by the IASB, 'which has made much progress in a short time frame in response to the urgent calls for change from the G-20, the Financial Stability Board and others'.