The future of the International Financial Reporting Standards (IFRS) has been thrown into doubt following controversy over part of the proposed regime.

The furore relates to IAS 39, which deals with the way financial assets are accounted for. IAS 39 must be endorsed by the European Commission before it can come into force.

But it has been subject to intense criticism due to nervousness over the way in which assets are valued, known as fair value accounting.

If the standard was not endorsed it could throw the rest of the IFRS regime into doubt.

A spokesman for the International Accounting Standards Board, which is developing the regime for the insurance industry set to come into effect in 2005, said: "It is not clear what would happen if IAS 39 was not endorsed. It would be chaos. Whether the regime for the insurance industry would come into force would be up to the commission."

Frits Bolkestein, the EU Commissioner leading the IFRS project, has said he wants IAS 39 endorsed by March 2004.