Global Standards for the world economy

Saturday 29 April 2017

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IASB meeting summaries and observer notes

 IASB December 2008


Financial instruments

In October the IASB and the US Financial Accounting Standards Board announced their joint approach to financial reporting issues arising from the global financial crisis. As part of that approach, the boards held three public round table meetings in November and December - one each in Europe, North America and Asia. The round tables were arranged to help the boards identify accounting issues that might require their urgent and immediate attention to improve financial reporting and help enhance investor confidence in financial markets.

At this meeting, the Board discussed some of the main suggestions made by round-table participants and decided to publish two exposure drafts (EDs):

  • One ED will propose clarifying that, when an entity reclassifies a hybrid financial asset out of the fair value through profit or loss category, the entity must assess whether it must separate an embedded derivative from the host contract. The ED will also address other issues related to that clarification.
  • The other ED will propose additional disclosure requirements for investments in debt instruments (other than those classified as at fair value at through profit or loss). (The FASB is expected to propose similar disclosure requirements.)

The Board expects to publish both EDs by the end of 2008.

The Board also tentatively decided to consider urgently with the FASB other suggestions made by round table participants as part of the boards’ broader project on accounting for financial instruments:

  • accounting for impairments of financial assets, including impairment triggers and reversals of impairment losses for available-for-sale equity instruments
  • the fair value option (FVO), including its scope, the eligibility requirements in IAS 39 and the ability to reclassify financial instruments classified as at fair value through profit or loss under the FVO to another category

Responding to particular practice problems raised by round-table participants, the Board tentatively decided that additional IFRS guidance on the following three topics is unnecessary at this time:

  • the definition of held for trading
  • accounting for investments in collaterised debt obligations
  • measuring financial instruments when markets are no longer active.

Date: 12/15/2008