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IASB and FASB issue common offsetting disclosure requirements

 16 December 2011

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) today issued common disclosure requirements that are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position. The eligibility criteria for offsetting are different in International Financial Reporting Standards (IFRSs) and U.S. Generally Accepted Accounting Principles (US GAAP).

Offsetting, otherwise known as netting, is the presentation of assets and liabilities as a single net amount in the statement of financial position (balance sheet). Unlike IFRSs, US GAAP allows companies the option to present net in their balance sheets derivatives that are subject to a legally enforceable netting arrangement with the same party where rights of set-off are only available in the event of default or bankruptcy.

To address these differences between IFRSs and US GAAP, in January 2011 the IASB and the FASB issued an exposure draft that proposed new criteria for netting that were narrower than the current conditions currently in US GAAP. However, in response to feedback from their respective stakeholders, the boards decided to retain their existing offsetting models and instead issue new disclosure requirements to allow investors to better compare financial statements prepared in accordance with IFRSs or US GAAP.

The common disclosure requirements also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. Further information is included in a project summary and feedback statement, also issued today.

Hans Hoogervorst, Chairman of the IASB, said: “These disclosures will help investors to bridge differences in the offsetting reporting requirements of IFRSs and US GAAP, while the additional requirements will also provide better information on how companies mitigate credit risk related to offsetting. That said, using disclosures to bridge differences in offsetting requirements was plan “B” for both boards.”

Leslie F. Seidman, Chairman of the FASB, said “The expanded disclosures are responsive to the feedback we received from investors, who wanted to understand both the gross and the net amounts for items offset in accordance with legally enforceable netting arrangements. We are also requiring expanded information about the collateral pledged and held in these arrangements.”

Companies and other entities are required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The required disclosures should be provided retrospectively.

An interactive webcast by the IASB on the amendments will be held at 10:30 and again at 15:00 GMT on 19 December 2011. To register, please click here.

More information about the project including a project summary and feedback statement and an IASB podcast introducing the amendments can be accessed via the IASB’s project website at:  

The standard will be available to eIFRS Professional and Comprehensive subscribers.


Press enquiries

  • Mark Byatt, Director of Communications and External Affairs, IFRS Foundation
    Telephone: +44 (0)20 7246 6472
  • Sonja Lardeau, Communications Manager, IFRS Foundation
    Telephone: +44 (0)20 7246 6463
  • Christine Klimek, Media Relations, Financial Accounting Foundation
    Telephone: (203) 956-3459

Technical enquiries

  • Barbara Davidson, Senior Technical Manager, IASB
    Telephone: +44 (0)20 7246 6907



Related information 

  • View Amendments to IFRS 7 [eIFRS Professional and Comprehensive only]
  • Click here for a print friendly PDF of the press release
  • Click here to download a project summary and feedback statement about the common disclosure requirements
  • Click here to listen to a podcast
    introducing the amendments to IFRS 7
  • Click here to visit the project website