Financial Securities' Reporting Issues: A New IFRS 9 Point of View

A series of experts in the field of finance nowadays say that the days for financial engineering developed through off shores are long gone and this is not because of some imposed governmental restrictions, but mostly because financial institutions have understood that using derivatives can even be more efficient (Chorafas, 2008). Who would have said twenty years ago that derivatives could be designed so that they allow us to buy and sell credit risk? Still, nowadays derivatives are being traded so that they facilitate banks to sell credit risk associated with their loans portfolio and giving buyers the possibility to diversify their exposal associated to the owned securities by combining credit risk and price risk. Some of these transactions are being done secretly, so that only a few persons within the financial institutions know everything about the purpose of those transactions (Chorafas, 2008), discretion being a must in the field of creative accounting concerning financial debts, an area we should not forget that is extremely profitable.

This would be the context in which we need to place accounting principles capable of generating informational transparency that is necessary to creating capital markets with as high efficiencies as possible. And if all these realities concerning the opportunities in manipulating accounting information through the use of derivatives, of which we are all aware of, does not represent enough “negative publicity”, the current financial crisis brought derivatives even more in the spotlight, the most common appellative currently used being the one of “toxic assets”.

We are therefore faced with a difficult task, but we will make everything in our power in order to reveal as much aspects in the field of accounting for financial instruments, especially derivatives, with the main purpose of ensuring them a fair trial. As for the current financial crisis, it will for sure say its word through the developed research, being carefully analyzed in order for us to come up with pertinent, rather than impulsive conclusions. When we say impulsive reactions we refer to some tendencies of blaming the international referential, the concept of fair value and also reaching out in order to forbid derivatives’ trading, all these in the context of the circumstances associated with the last years’ financial crisis.

This paper is a research output of projects GA403/11/0002 registered at Czech Science Foundation and CNCSIS 2571/2009 registered at Romanian Science Foundation.