IAS 39 The fair value option: transition issue
The staff made a viva voce presentation (that is, there were no papers, either for the Board or Observers) on an issue that several insurance companies had asked to have highlighted. The staff noted that the issue was not a new matter and had been discussed at the time the Fair Value Option had been approved.
The issue had to do with the restatement of comparatives and affected first-time adopters especially. There was a potential problem between the definitions in IAS 39 paragraphs 9(b)(i) and 9(b)(ii) and the look-back period permitted when an entity adopts IAS 39 for the first time. The insurance companies were concerned about 'undue restrictions' on designation and a lack of comparability between current and comparative periods.
Board members held a brief discussion on the topic, but agreed that the issue was one of which they were aware when they approved the amendment to the Fair Value Option in April 2005. There was no appetite to re-open the decisions, especially because to do so might necessitate additional due process, which would delay the issue of an amendment that was considered important by constituents.