The IASB joined with the FASB to attend a presentation by two representatives of the CFA Institute. The session was educational, and no decisions were made. The presentation started with executive director of the CFA Center outlining the new structure of the CFAI, and congratulating the Boards, particularly the FASB, on the manner in which they have stuck to their principles amidst overwhelming political pressure on accounting for stock options. The CFA Institute supports the position of the FASB and is encouraging its members to lobby to ensure this position is not overruled by the US Senate.

The presentation outlined the deficiencies, from the point of view of financial analysts, of the current financial reporting model. These include that it is based primarily on historical cost not fair value, and that different items are classified in different manners (profit and loss normally classified by function while balance sheet is normally by nature). From the point of view of analysts it would be preferable if no netting were allowed, no off-balance-sheet items were allowed (if a transaction affects the current wealth of existing equity holders it should be reflected in the primary financial statements), direct cash flow statements should be required, all transactions should be classified by nature, fair value measurements should dominate, and there should be no accounting entries such as deferrals, amortisations, and recycling.

The presenters discussed a possible financial reporting model that emphasises separating cash flows, accruals, and fair value changes to show a comprehensive method by which opening balance sheet flows to the closing balance sheet.

The Board members discussed the advantages and disadvantages of such a model, asked questions about the mechanics of the model, and discussed illustrations. The CFA Institute plans to issue a publication outlining this model in more detail in early 2005.