Washington, D.C., November 21, 2007
-- The International Finance Corporation (IFC) today announced that it has decided to restate the audited consolidated financial statements for its last three fiscal years ended June 30, 2007, and to delay the completion of its consolidated condensed financial statements for the first quarter of its current fiscal year ended September 30, 2007.
The restatement is driven by a profit sharing feature associated with an equity investment in an IFC client company. Under Statement of Financial Accounting Standards No. 133 (FAS 133), this complex feature related to an equity investment needs to be accounted for as a stand-alone derivative and therefore is to be recorded as a liability, in an amount which reflects the fair value of that derivative. At June 30, 2007, this liability was about $160 million. At that time, IFC had an unrealized capital gain of about $250 million on the equity investment, net of the amount of the liability.
The decision to restate follows discussions with IFC’s independent auditors on the most appropriate accounting under FAS 133 for derivatives associated with certain equity investments.
In consultation with its independent auditor, IFC has therefore begun a review of its accounting policies and practices with regard to the appropriate accounting treatment of a limited number of equity investments held by IFC in client companies.
Upon completion of this review, IFC will publish as soon as practicable restated audited consolidated financial statements for its last three fiscal years ended June 30, 2007, as well as consolidated condensed financial statements for the quarter ended September 30, 2007.
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About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC’s vision is that poor people have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through loan participations and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit www.ifc.org.
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