Non-US companies using derivatives shun FAS 133

Although nearly half of the world’s companies that use derivatives have implemented US accounting standard FAS133, or its international equivalent IAS39, there is little interest in compliance by companies based outside the US, according to a research report published by US-based financial consultancy Greenwich Associates.

The proportion of companies that have implemented FAS133 or IAS39 has risen from 25% in 2000 to 49% now. But the rise stems largely from the US, where compliance is now mandatory.

The report contradicts predictions made by some market analysts that the collapse of Enron would prompt more non-US companies to become FAS133/IAS39 compliant to allay shareholder concerns.

In Asia, 85% of companies are now compliant, but this is largely due to the high rate of implementation in Japan, which is now 83% compliant. The figure for Taiwan, for example, is just 25%.

The report said that Europe has the lowest overall compliance rate – just 25%, although the UK figure is 39%.

The report suggests there is little incentive for companies to implement the stricter derivatives accountancy regulation unless the company plans to raise capital in the US equity markets.