SECP grants Relaxation of IAS 39

The Securities and Exchange Commission of Pakistan (SECP) has granted ’relaxation’ in the requirements of IAS 39 by allowing impairment losses on available-forsale (AFS) equity securities to be charged against equity, rather than against profit or loss, as IAS 39 requires। The ’relaxation’ is valid till 31st December 2009. The ’relaxation’ has been granted in response to requests from various financial institutions, including mutual funds, insurance companies, leasing companies, banks, and the corporate sector in general. The SECP said it granted the relaxation because recognizing impairment losses on AFS equity securities through profit or loss ’will not reflect the correct financial performance of the corporate entities’. The SECP’s announcement said that ’those companies who are willing to follow the full requirements of IAS 39 are encouraged to do so’.