The session was split in three parts:

• Part 1: Debrief from the first roundtable
• Part 2: Agenda proposal
• Part 3: Issues raised by constituents for urgent consideration

Debrief from the first roundtable

Staff debriefed the Board on the first roundtable on the financial crisis held in London on 14 November 2008. It noted that a general theme at the roundtables was that any next steps of the Boards should lead to convergence between IFRS and US GAAP and that such steps must adhere to due process. It was also highlighted that impairment models under both GAAPs were considered insufficient, and impairment consumed most of the time at the roundtables. Other issues discussed were: accounting for collateralised debt obligations (CDO), fair value option, fair value measurement in illiquid markets.

Agenda proposal

The staff introduced its agenda proposal to add to the IASB's active agenda a project on a comprehensive review of financial instruments accounting. The Board was informed that the proposal had already been discussed with the SAC. The staff noted that SAC supported adding a project to the active agenda, but was split about the expected output.

Board members questioned what the scope of the project would be. Staff responded that the scope would be defined after the project was added to the active agenda. Staff said that more urgent issues could be resolved faster. The staff also informed the Board that the FASB will discuss a similar proposal in the next couple of weeks.

After discussion the Board voted unanimously to approve the staff recommendation to add the project to the active agenda.

Issues raised by constituents for urgent consideration

The staff presented the Board with three Agenda Papers:

• Fair value option
• Accounting for investments in credit-linked instruments
• Impairment requirements for financial instruments

Fair value option

The staff introduced the paper. One Board member noted that a view generally expressed at the roundtables so far was that reclassification out of the fair value option would not improve financial reporting. Another Board member noted that the financial instruments project should consider removing the restrictions that IFRS currently have for invoking the fair value option, thereby converging with US GAAP.

Accounting for investments in credit-linked instruments

There was some confusion about the term credit-linked instruments. One Board member noted that all financial instruments are somewhat linked to credit risk. The staff acknowledged this, but noted that this was a term used in the market for certain instruments. In particular, the perceived different accounting treatment for synthetic Collateralised Debt Obligations (CDOs) under IFRS and US GAAP caused concern amongst constituents. The staff highlighted that this might not be an intended inconsistency and that the US GAAP provisions might have been applied more broadly than intended. The chairman asked the FASB representatives if they will take any actions. FASB staff said they are currently considering possible clarifications to the provisions concerned under US GAAP.

Impairment requirements for financial instruments

The staff discussed current approaches to recognising and measuring impairment under both US GAAP and IFRS. The existence of the different measurement categories aggravated the issue as different impairment models apply to them - in addition to the differences between US GAAP and IFRS in the scope of the various measurement categories. One Board member asked about the conceptual basis for the impairment model under IFRS.

Some Board members highlighted that this issue cannot be fixed quickly and should be considered as part of the comprehensive financial instruments accounting project.