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Final stage

On 7 October 2010, the International Accounting Standards Board issued Disclosures–Transfers of Financial Assets (Amendments to IFRS 7 Financial Instruments: Disclosures). The amendments have an effective date of 1 July 2011.

About the project

The project encompassed the requirements in IAS 39 Financial Instruments: Recognition and Measurement for when a financial asset or financial liability must be removed from an entity’s statement of financial position and the related derecognition disclosure requirements in IFRS 7 Financial Instruments: Disclosures.

The IASB added this project to its agenda for the following reasons:

  • to improve the derecognition requirements for financial assets in IAS 39, which have been perceived to be complex to understand and apply in practice;
  • to provide users with more information about an entity’s exposure to the risks of transferred financial assets; and
  • to facilitate convergence between the derecognition requirements in IAS 39 and those in US GAAP.

In May 2010, the IASB and US FASB reconsidered their strategies and plans for derecognition in light of:

  • their joint discussions of the alternative derecognition model developed by the IASB;
  • the recent FASB amendments that reduce the differences between IFRSs and US GAAP; and
  • the guidance the IASB received from National Standards-Setters on the largely favourable effects of the IFRS derecognition requirements during the financial crisis.

The boards agreed that their near-term priority should be on increasing the transparency and comparability of their standards by improving and converging US GAAP and IFRS disclosure requirements for financial assets transferred to another entity.

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