Act in haste, repent at leisure: The International Accounting Standards Board has announced plans to fix a problem with an amendment to financial instrument reclassification rules that it rushed through in October.

Acting under intense pressure from European politicians—pressure that almost made IASB Chairman Sir Davie Tweedie resign—in October the Board suspended its normal process of exposure and consultation to change its rules in a way that allowed banks to protect some financial assets from massive write-downs in accordance with fair-value accounting rules.

But since then, accounting experts have pointed out a flaw with the revised IFRS. As the rules now stand, it is not clear whether a company that reclassifies a collateralized debt obligation so that the CDO is not carried at fair value through the profit-and-loss account should separately account for any embedded derivatives.

It is a highly technical point, and one described as “not very important” in a briefing written for the Financial Reporting Council of Australia. But it also underscores the danger of rule making on the fly. Indeed, commenting on the new proposals, Tweedie noted that issuing the October amendment without normal due process “always carried the risk of unintended consequences.”

The new proposals would require all embedded derivatives to be assessed and, if necessary, separately accounted for in financial statements. They are open for comment until Jan. 21, 2009.