The IASB and the FASB discussed the following issues:
- Whether offsetting should be permitted for multilateral arrangements
- Transition requirements and the comment period for the next due process document.
The boards tentatively decided the following:
- An entity would be required to offset a recognised financial asset and financial liability if the criteria for offset were met, irrespective of whether the right of offset arises from a bilateral arrangement (between two parties) or from a multilateral arrangement (that is, between more than two parties).
- An entity would be required to apply the proposed requirements retrospectively.
The boards also decided that an entity should provide information about financial assets and liabilities subject to offset, and related arrangements (such as collateral agreements), and the effect of those arrangements on an entity's net exposure, by category of financial instrument, including:
- the gross carrying values (ie before taking into account amounts offset in the statement of financial position and other mitigating factors).
- shown separately,
- the amounts offset under the offset criteria in paragraph 3 to determine the carrying amounts in the statement of financial position and
- the net carrying amount reported in the statement of financial position.
- shown separately, the portion of the net carrying amount reported in the statement of financial position that is covered by each type of conditional and legally enforceable right of set-off.
- shown separately, the following types of collateral:
- amount of cash obtained or pledged as collateral in respect of those assets and liabilities,
- the carrying amount of other financial instruments pledged as collateral and
- the fair value of other financial instruments received as collateral.
- the net exposure after taking into account the effect of the items in (b)-(d).
Such information should be presented in a single note and in a tabular format, unless another format is more appropriate. Additionally, financial assets and financial liabilities should be disclosed separately.
Additionally, the boards decided that an entity would also be required to provide a description of the nature of offset agreements for the amounts included in item (3) above.
The boards directed the staff to prepare an exposure draft for vote by balloting.