|
Upcoming Board meetings
The classification and measurement of financial liabilities will be discussed at an additional joint IASB/FASB
board meeting on 10 February 2010. As part of that meeting, the results of the survey on own credit that
the IASB conducted during January 2010 will be discussed.
To see details of this meeting (including copies of observer notes), to register to attend the meeting, or to observe the webcast, please click here.
It is expected that the classification and measurement of financial liabilities will be further discussed at another joint IASB/FASB meeting in the week beginning 15 February 2010. The hedge accounting phase
of the project is also expected to be discussed at this meeting.
Stay informed
As part of its comprehensive review of IAS 39 Financial Instruments, IASB staff will be hosting a series of short live webcasts to keep interested parties up to date on progress of the project to replace IAS 39.
To listen to recordings of past webcasts and to view the presentations, click here.
We offer an email alert system that lets subscribers know when an update is posted to this page. If you would like to subscribe to this service and are already a registered IASB web user then please click here. If you are not already a registered IASB web user then click here. Email alerts will be text only. The number of updates sent will vary over the term of the project but we anticipate that they should occur two or three times a month in the near term. You can unsubscribe at any time by using the link above.
Project objective
The objective of this project is to improve the decision-usefulness of financial statements for users by simplifying the classification and measurement requirements for financial instruments. The project will ultimately replace IAS 39 Financial Instruments: Recognition and Measurement.
IAS 39
IAS 39 establishes the principles for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. IAS 39 includes provisions about the classification of financial instruments, their ongoing measurement (including when impairment is required), when financial instruments should be recognised and derecognised and hedge accounting requirements.
Project plan and timeline
The IASB’s tentative project plan for the replacement of IAS 39 consists of three main phases:
- Phase 1: Classification and measurement. On 12 November 2009, the IASB published IFRS 9 Financial Instruments on the classification and measurement of financial assets. The Board has finalised this phase in time to allow, but not require, early application for 2009 year end financial statements.
The IASB is continuing to deliberate the classification and measurement of financial liabilities. The IASB plans to issue an exposure draft on this part of the project when the FASB issues its comprehensive ED on accounting for financial instruments (covering classification and measurement, impairment and hedge accounting for hedged financial instruments). The target date for the FASB’s exposure draft is the first quarter of 2010.
For a summary of decisions to date, click here.
For a copy of the feedback statement summarising the responses to the IFRS 9 consultations, click here.
- Phase 2: Impairment methodology. On 5 November 2009, the IASB published for public comment the exposure draft Financial Instruments: Amortised Cost and Impairment. The ED is open for comment until 30 June 2010.
For a summary of decisions to date, click here. For a copy of the exposure draft, click here.
- Phase 3 – Hedge accounting. The Board is currently conducting outreach with its constituents and intends to issue an exposure draft on hedge accounting in the first quarter of 2010.
For a summary of decisions to date, click here.
The above is in addition to the current ED on derecognition.
The IASB aims to replace all of the requirements of IAS 39 during 2010.
Convergence with US GAAP
Removing inconsistencies between US GAAP and IFRS in accounting for financial instruments would enable comparisons to be made more easily between entities applying IFRSs and those using US GAAP. In order to work towards convergence of their requirements both the IASB and the US Financial Accounting Standards Board (FASB) are reconsidering the classification, measurement and impairment of financial instruments.
Please click here to access the FASB’s financial instruments project website that includes a summary of decisions reached by the FASB.
Related consultative documents
- In November 2009, the IASB published an exposure draft Financial Instruments: Amortised Cost and Impairment. This exposure draft forms part of phase 2 of the project.
Click here to read the exposure draft and related documents. The comment period will close on 30 June 2010.
- In July 2009 the IASB published an exposure draft Financial Instruments: Classification and Measurement. This exposure draft forms part of phase 1 of this project.
Click here to read the exposure draft and related documents. The comment period closed on 14 September 2009.
- In June 2009 the IASB published a Request for Information on the feasibility of an expected loss model for the impairment of financial assets. The comment period closed on 1 September 2009.
- The IASB published an invitation to comment on credit risk in liability measurement in June 2009. The comment period closed on 1 September 2009.
- The IASB published for comment an exposure draft on Derecognition in March 2009. The comment period closed on 31 July 2009.
- In March 2008 the IASB and the FASB published for comment a discussion paper Reducing Complexity in Reporting Financial Instruments. The comment period ended on 19 September 2008. Click here to read the discussion paper [PDF 792 KB].
Next steps
Phase 1 - The Board published the final IFRS on the classification and measurement of financial assets on 12 November 2009. The Board is deliberating the classification and measurement of financial liabilities jointly with the FASB and aims to complete this during 2010.
Phase 2 - The Board published an ED on 5 November 2009. The ED is open for comment until 30 June 2010.
Phase 3 - The Board is aiming to publish an exposure draft in the first quarter 2010.
Other meetings
Financial Instruments Working Group
A meeting was held in London on 9 December 2009.
- To access a recording from this meeting, click here
A meeting was held in London on 9 September 2009 to discuss the recent exposure draft Financial Instruments: Classification and Measurement.
- To access a recording from this meeting, click here.
Financial Instrument round tables
Joint Financial Instrument round tables were held by the IASB and the FASB in Norwalk on 14 September 2009:
- To access a recording from this meeting, click here.
Joint Financial Instrument round tables were held by the IASB and the FASB in Tokyo on 3 September 2009:
- To access a recording of the morning session, click here.
- To access a recording of the afternoon session, click here.
Joint Financial Instrument round tables were held by the IASB and the FASB in London on 10 September 2009:
- To access a recording of the morning session, click here.
- To access a recording of the afternoon session, click here.
Webcasts
The staff have provided a series of webcasts on the project to replace IAS 39.
To access recordings of the webcasts, click here.
Background information
The original version of IAS 39 was published by the Board’s predecessor body, the International Accounting Standards Committee (IASC) and became effective for financial statements covering financial years beginning on or after 1 January 2001. As part of its initial agenda of technical projects the Board undertook a project to improve a number of standards including IAS 39. Until the release of the current exposure draft on derecognition, the Board has not reconsidered the fundamental approach to accounting for financial instruments.
In March 2006, the IASB and the FASB further clarified their intentions to work together to improve and converge financial reporting standards by issuing a Memorandum of Understanding (MoU), A Roadmap for Convergence between IFRSs and US GAAP - 2006 - 2008. As part of the MoU, the Boards worked jointly on a research project to reduce the complexity of the accounting for financial instruments. This joint effort resulted in the IASB’s issuance of the March 2008 discussion paper, Reducing Complexity in Reporting Financial Instruments, which the FASB also published for comment by its constituents. Focusing on the measurement of financial instruments and hedge accounting, the discussion paper identified several possible approaches for improving and simplifying the accounting for financial instruments.
In a separate project, the FASB issued the June 2008 exposure draft, Accounting for Hedging Activities, an amendment of FASB Statement No. 133. The exposure draft proposed amendments intended to simplify hedge accounting and improve financial reporting.
At the October 2008 joint FASB/IASB meeting, the IASB and FASB staffs presented summaries of the comments received on both the discussion paper on reducing complexity and the exposure draft on hedging.
A majority of respondents to the discussion paper supported a significant change in the current requirements for reporting financial instruments. In addition, many of the user respondents expressed support for the Boards’ working together on a project to simplify the accounting for hedging activities, provided that the simplification would reduce the complexity of financial statement interpretation.
A majority of respondents to the exposure draft were concerned that many of the proposed amendments would create further divergence between hedge accounting under US GAAP and under IFRS; many of these respondents urged the Boards to work together on a joint project to improve hedge accounting, noting that the FASB’s hedge accounting project could be incorporated into the Boards’ research projects on reducing complexity.
In November 2008 the IASB added this project to their active agenda. The FASB also added this project to their agenda in December 2008. |