IASB March 2007

Due process document

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 this meeting, the Board considered different approaches to moving towards the fair value model that might be discussed in the due process document. The approaches discussed included:

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

Regarding the latter approach, the Board discussed several criteria that might be used to develop examples of a possible next interim step. The key criteria discussed included requiring more financial instruments to be remeasured at fair value and reducing the complexity of existing requirements.

The Board reached no preliminary views at this meeting.