Responses to IASB Documents for Comment

IAS 39 Financial Instruments: Recognition and Measurement

Exposure Draft – Novation of Derivatives and Continuation of Hedge Accounting (Proposed amendments to IAS 39 and IFRS 9) – February 2013

On March 26, 2013, the AcSB submitted a comment letter responding to the IASB's Exposure Draft issued in February 2013. The letter supports the proposal to amend the hedge accounting requirements in IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments, when issued, to require that hedge accounting be continued when a derivative is novated to a central clearing party. However, the letter disagrees that the novation must be as a result of law or regulation. Read the AcSB letter posted by the IASB.

Exposure Draft – Financial Instruments: Amortised Cost and Impairment – November 2009

On June 29, 2010, the AcSB submitted a comment letter responding to the IASB’s Exposure Draft. The letter does not support the IASB’s proposal to require that an entity’s expectations about future credit losses on a financial asset measured at amortized cost should be incorporated into the asset’s effective interest rate with subsequent changes in expectations recognized in profit and loss immediately. The AcSB thinks that the proposal does not meet the IASB’s and the FASB’s objective of developing a single global standard for financial instruments that reduces the complexity in current standards and produces financial statements that are more easily understood. The AcSB letter posted by the IASB is available here.

Exposure Draft – Fair Value Measurement – May 2009

On September 29, 2009, AcSB staff submitted a comment letter responding to the IASB’s Exposure Draft. The letter agrees that the proposed standard on how to determine a fair value measurement is a significant improvement compared to existing guidance in IFRSs. Compared to US SFAS No. 157 Fair Value Measurements, as amended (or ASC Topic 820-10), the letter identifies several significant concerns that could result in significant GAAP differences between the standards that must be addressed before finalizing the proposed IFRS. During the transition to the new fair value measurement standard, the letter also recommends that IFRS 1 First-time Adoption of International Financial Reporting Standards be amended to allow IFRS adopters to prospectively apply the new IFRS. The AcSB staff letter posted by the IASB is available here.

Discussion Paper – Credit Risk in Liability Measurement – June 2009

On September 4, 2009, AcSB staff submitted a comment letter responding to the IASB’s Discussion Paper. The letter supports that fair value measurement of liabilities should include the market’s best estimate of credit risk at a particular point in time. However, the letter expresses concern that there are varied views among financial statement users, academics and staff as to whether there are circumstances in which liabilities should be measured at current measures that exclude the effects of the entity’s credit standing. The AcSB staff letter posted by the IASB is available here.

Request for Information – (‘Expected Loss Model’) Impairment of Financial Assets: Expected Cash Flow Approach – June 2009

On September 1, 2009, AcSB staff submitted a comment letter responding to the IASB’s Request for Information on an expected loss model for recognizing impairment of financial assets. The letter notes that the proposals would not be consistent with the measures used in current credit management and monitoring processes. In addition, the letter comments that the proposed model would blur the distinction between net interest income and credit losses as it effectively includes allowances for future credit losses in the net interest income line. The AcSB staff letter posted by the IASB is available here.

Exposure Draft – Derecognition (Proposed amendments to IAS 39 and IFRS 7) – March 2009

On July 31, 2009, AcSB staff submitted a comment letter responding to the IASB’s Exposure Draft. The letter does not support the proposals because they are not considered an improvement over the existing provisions in IAS 39. The letter does support the “alternative view” summarized in the accompanying Basis for Conclusions, with some concerns to be resolved. The AcSB staff letter posted by the IASB is available here.