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IASB meeting summaries and observer notes

 IASB December 2012


In November 2012 the IASB completed the technical discussions on the proposed "three-bucket" impairment model. During that meeting the IASB made tentative decisions on:

  1. the clarification of the lifetime loss criterion;
  2. methods and information to assess that criterion; and
  3. disclosures for the simplified approach for trade and lease receivables.

At this month's meeting the IASB discussed a sweep issue and due process considerations that were necessary before beginning the balloting process. In addition the IASB staff asked permission to begin the balloting process for the Re-exposure Draft.

Sweep issue—transition

The IASB tentatively decided to update the wording of one of the transition requirements to ensure consistency with the updated lifetime loss criterion. That is, if an entity does not use the initial credit quality at transition for a financial asset, the entity shall evaluate the financial asset only on the basis of whether the credit quality is below investment grade at the date of initial application.

The IASB noted that the modification did not affect the substance of the proposed transition requirements.

During the discussion some IASB members observed that entities using delinquencies as an indicator of deterioration shall use that information, rather than the investment grade criteria, as a basis for assessing lifetime losses at transition.

Fourteen IASB members agreed, one was absent.

Due process considerations

The IASB observed that consultative steps taken had been extensive, and agreed that the due process requirements to begin the balloting process had been met. It was noted that the IASB intends to undertake fieldwork during the comment period by working closely with a small number of institutions in different jurisdictions to assess and illustrate the benefits of the proposed expected loss impairment model. In addition, the IASB will solicit views on the cost and operability of the proposals.

Fourteen IASB members agreed, one was absent.

Re-exposure, comment period, and permission to draft

The IASB discussed the need for re-exposure since redeliberation of issues raised on the original Exposure Draft (ED) and Supplementary Document (SD). The IASB agreed to publish an Exposure Draft for the Impairment project.

The IASB tentatively decided on a 120-day comment period for the Exposure Draft.

On the basis of the finalisation of tentative technical decisions, of the agreement on the adequacy of due process, and the decision to publish a Exposure Draft, the IASB gave permission to begin the process of balloting the document.

Fourteen IASB members agreed, one was absent.

One IASB member stated an intention to consider dissenting from the Exposure Draft.

Next steps

The IASB will proceed with the balloting process and plans to publish the Exposure Draft for comment in Q1 2013.


Date: 12/14/2012