The IASB’s comprehensive project on financial instruments responds directly to and is consistent with the recommendations and timetable set out by the G-20 nations at their April meeting, according to an IASB press release. The IASB will work jointly with FASB to pursue the objective of a globally accepted replacement of the requirements on accounting for financial instruments.
The timetable for the proposal to replace IAS 39 included developing measurement methods, a categorization approach and presentation requirements between April and June. Forthcoming stages of the project include:
July. Decisions regarding measurement methods and impairment for cost-based method and categorization approach.
August. Decisions regarding initial measurement and fair value option and reclassification; development of other aspects, including scope, derivatives and embedded derivatives, disclosures, transition and effective date, as well as application guidance.
September–October. Finalization of proposals for public comment. Consideration of the implications of the conclusions for other aspects of IAS 39, including hedge accounting.
The IASB also reviewed the new FASB Staff Positions (FSPs) FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, and FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. The IASB concluded that the guidance on fair value measurement in FSP FAS 157-4 is consistent with existing guidance on IFRS contained in the IASB’s Expert Advisory Panel report, Measuring and disclosing the fair value of financial instruments in markets that are no longer active. To ensure ongoing consistency in applying IFRS and U.S. GAAP, the IASB included relevant guidance from the FSP in its exposure draft on fair value measurement.
On the question of impairment, the IASB agreed with the widespread view among commentators that the IASB should improve its impairment requirements. The IASB will take up the broad issue of impairment as part of its comprehensive and urgent review of IAS 39. The IASB said it believes that an immediate response to FSP FAS 115-2 and FAS 124-2 is unnecessary. The IASB will work with FASB as part of its comprehensive project to ensure global consistency in impairment approaches. For more information, visit www.iasb.org.
The International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC) proposed that its financial reporting requirements for financial instruments be converged with the IASB’s standards for financial instruments as of Dec. 31, 2008, with limited changes. These proposed changes are contained in three exposure drafts: ED 37, Financial Instruments: Presentation; ED 38, Financial Instruments: Recognition and Measurement; and ED 39, Financial Instruments: Disclosures.
Additional application guidance has been included in each ED on key public sector issues. Comments are due by July 31. The EDs may be viewed at www.ifac.org/EDs.