IAS 39 requires an incurred loss impairment approach for financial assets measured at amortised cost. The incurred loss impairment approach has been criticised for many reasons as being a primary weakness in accounting for financial assets at amortised cost. The financial crisis brought many of these criticisms to the forefront. As a result, the IASB has decided to pursue possible alternatives.
In March 2008, the IASB published a Discussion Paper outlining its preliminary views on reducing complexity in the accounting for financial instruments.
On 25 June 2009, the IASB published a Request for Information to seek comments on the feasibility of an expected cash flow approach for the impairment of financial assets.
On 5 November 2009, the IASB published an Exposure Draft (ED) that uses an expected cash flow approach for the impairment of financial assets.
On 31 January 2011 the IASB and FASB published for public comment a Supplementary Document on impairment accounting. For the IASB the document (Financial Instruments: Impairment) is a supplement to the Exposure Draft Financial Instruments: Amortised Cost and Impairment. The comment deadline for this document was 1 April 2011.
On 7 March 2013 the IASB published for public comment a revised set of proposals for the impairment of financial instruments. The proposals build upon previous work to develop a more forward-looking provisioning model, which recognises expected credit losses on a more timely basis. The Exposure Draft will be open for comment until 5 July 2013.