Sunday 21 March 2010

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Amendments to IFRS 7 Financial Instruments Disclosures

Improving Disclosures about Financial Instruments (Amendments to IFRS 7 Financial Instruments: Disclosures)

 

In March 2009, the IASB issued Improving Disclosures about Financial Instruments (Amendments to IFRS 7 Financial Instruments: Disclosures).

The full text of the amendments to IFRS 7 is available for eIFRS subscribers or printed copies will be available to purchase from our online shop soon.

Reason for the amendments

The amendments were issued as part of the IASB’s response to the global financial crisis.

Click here for more on the IASB’s response to the global financial crisis.

The IASB was informed by users of financial statements and others that enhanced disclosures about fair value measurements were required, especially in the light of the present market conditions. The IASB acknowledged that enhanced disclosures were needed to provide users of financial statements with useful information about valuations, methodologies and the uncertainty associated with fair value measurements.

Moreover, the amendments clarify and enhance existing disclosure requirements about the nature and extent of liquidity risk arising from financial instruments. These clarifications address application issues raised by preparers and auditors. Enhanced disclosure requirements result in disclosures that better enable users to evaluate an entity’s exposure to liquidity risk arising from financial instruments and how the entity manages this risk.

Scope of the amendments

The amendments address:

  • Fair value measurement disclosures.
  • Disclosures about the nature and extent of liquidity risk arising from financial instruments. 
Effect of the amendments

The amendments introduce a three-level fair value disclosure hierarchy that distinguishes fair value measurements by the significance of the inputs used. These disclosures are expected to provide more information about the relative reliability of fair value measurements. The disclosures are also expected to improve comparability between entities about the effects of fair value measurements and increase convergence of IFRSs and US Generally Accepted Accounting Principles (GAAP).

In addition, the amendments enhance disclosure requirements on the nature and extent of liquidity risk arising from financial instruments to which an entity is exposed. The amendments clarify current requirements to address application issues. The amendments also reinforce the principles of IFRS 7 to ensure that information disclosed enables users to evaluate the nature and extent of liquidity risk arising from financial instruments and how the entity manages this risk.

Further information

Download  the full Project Summary which includes the project history, including a summary of past Board discussions.

  • Click here  to view comment letters on the Exposure Draft.
Related projects

Other related projects include:

 

 

 

Project contact

Liz Figgie
Senior Project Manager
email: lfiggie@iasb.org

 

Hilary Eastman
Project Manager
email: heastman@iasb.org

 

Martin Friedhoff
Project Manager
email: mfriedhoff@iasb.org

 

Carol Wong
Assistant Project Manager
email: cwong@iasb.org