IASB Chairman's report
Sir David reported on the IASB's standard-setting activities. The Board (and the FASB) is focused on the 30 June 2011 target. However, he stressed that quality mattered more than deadlines and that if one project falls away, 'so be it'. He praised the IASB staff, who were working extremely diligently in very challenging circumstances, as the Boards continued to explore possible ways of convergence. He also noted that the forthcoming SEC decision on the use of IFRSs by US domestic issuers was predicated on achieving convergence on the items in the MoU.
He noted that several new or significantly revised IFRSs were due to be issued in April. Of the four remaining MoU/G20 agenda items, three were 'significantly advanced'. The financial instruments project was proving difficult to achieve convergence. He noted that, while the FASB had backed off its 'full fair value' model, it was developing a mixed measurement model that was different to that in IFRS 9. In particular, it would retain a classification similar to 'available for sale', with all of the associated problems, that IFRS 9 removed. He noted that, in common with all convergence agenda items on which the Boards were unable to agree on a common set of proposals, the IASB would expose the FASB solution for comment.
Other aspects of the financial instruments project were also proving challenging. He summarised the impairment proposals. Results from roundtables and early comment letters were mixed. He noted that the IASB were 'way ahead' on hedging (the FASB has not started deliberations) and that initial reactions to the IASB's exposure draft seem positive. On offsetting, the FASB was split but initial feedback suggests the IASB's constituents seem to support the Board's proposals.
Insurance was 'very tough', but he noted that the insurance industry was now actively engaged with the Boards and helping them come to robust but workable solutions. The FASB had signalled that it was determined to change US GAAP, which might have helped.
On effective dates, he noted that IFRS 10-13 and IAS 27R and IAS 28R would have effective dates of 1 January 2013. The remaining four MoU standards would probably have effective dates of 1 January 2015, to allow for the systems changes that might be necessary.