The Financial Times is reporting the likely failure of the European Commission and the International Accounting Standards board to reach agreement over the controversial proposed accounting standard for derivatives, IAS 39.The EC appears likely to bow to pressure from some European banks and propose a partial implementation of the standard, a move that John Tiner, chief executive of the Financial Services Authority, says "would be damaging to the standard-setting process and to the quality of financial reporting". The Commission's likely stance could also put the longstanding goal of convergence between US and international accounting standards in jeopardy. Leading the opposition are banks from France, Italy, Spain and Belgium, who argue the IASB's proposal to report derivatives at "fair value" is inappropriate for instruments used to hedge against interest rate movements rather than traded for profit. The banks are concerned that reported earnings will be more volatile, as will their retained earnings balances, even if they make no change to their economic hedging practices. The Australian Bankers Association, among others, raised similar concerns in April when the Australia's Financial Reporting Council decided to proceed with the implementation of IAS 39 as it currently stands.The EC now appears likely to reject the IASB's compromise proposal involving enhanced presentation of derivatives in notes to the accounts, together with a commitment to consider future revisions to IAS 39 suggested by the banks. The FT's influential Lex columnist says, "The European Commission has wittered, and has now bowed to political pressure from France and its allies."Wittered? That had this writer reaching for the dictionary and, after failing to find it in the Macquarie, aOneLook web-search of 870 online dictionaries returned only one reference -- in the Cambridge Advanced Learners Dictionary. Probably says more about Lex's educational background than his or her journalistic ability.Oh, what does it mean? "To talk about unimportant things for a long time." Might be worth keeping in mind for that next committee meeting.But I digress.Lex continues, "This piecemeal approach is probably illegal and certainly irrational. If the Commission persists with this approach, it will torpedo the entire effort to introduce accounting convergence across the European Union through the adoption of international standards.""The Commission has been forced to bow to the storm whipped up by the financial institutions. A partial endorsement of IAS 39, however, would be the worst possible outcome. [The EU] must endorse the IASB's standards in whole, or not at all."