Under the proposed accounting rules companies have to isolate all the derivatives in every transaction and mark them to market. Charlotte Jones, partner at Ernst & Young in London, said, "This is a big task." Adding, "They could be in almost anything."
Mark Davis, director in the structured finance group at PricewaterhouseCoopers in London, said the task is especially time consuming for investors and diverse financial conglomerates. Investors have to pick through all their structured investment portfolio potentially splitting up every transaction. Diverse conglomerates, however, have the most enormous data gathering project to manage. Davis said they will have to educate each business unit about what constitutes as an embedded derivative and then each unit will have to collate all that data and account for it.
