IASB April 2007

At their joint meeting in April 2006, the IASB and the Financial Accounting Standards Board agreed on a goal of publishing a due process document on financial instruments (as envisaged in their Memorandum of Understanding) by January 2008. The boards agreed that this document would, as far as possible, include the preliminary views of each board.

At previous meetings, the Board discussed an accounting model that would achieve the long-term objective of requiring all financial instruments to be measured at fair value, with realised and unrealised gains and losses recognised in the period in which they occur (the ‘fair value’ model).

At its meeting in March 2007, the Board considered two approaches to moving towards the fair value model and reducing the complexity of existing requirements that will be discussed in the due process document. The two approaches were:

• developing an exposure draft of the fair value model; and
• developing and implementing one or more interim steps before requiring the fair value model.

At this meeting, the Board focused on how to illustrate the interim steps approach in the due process document. The Board considered an approach to developing possible examples of a next interim step. With the aim of reducing the complexity of existing requirements on financial instruments, the approach discussed by the Board suggested starting with one measurement principle, ie the fair value measurement principle, and then possibly making exceptions to that principle.

The Board discussed some possible exceptions to such a principle, and the consequences of (and complexity arising from) those exceptions.

The Board reached no preliminary views at this meeting.