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IAS 37 – Inclusion of credit risk in discount rate

Date recorded:

IAS 37 Provisions, Contingent Liabilities and Contingent Assets - Discount rate

The Committee reviewed the comments received on the revised tentative agenda decision on this issue issued in January 2011. Ten comment letters had been received, three from international audit networks and seven from entities and individuals in Canada.

The Committee had a short but heated debate on the issue. The Committee agreed to confirm its decision not to add the topic to its Agenda. The Agenda Decision is likely to include the comment that 'predominant practice today is to exclude own credit risk which is generally viewed as a risk of the entity rather than a risk specific to the liability'.

The Chairman noted that the objections seemed to stem from an industry in one country adopting IFRS in 2011 and opined that the objections were not persuasive to overturn the assertion that predominant practice among those already using IFRSs was to exclude own credit risk from 'risks specific to the liability' in IAS 37 paragraph 47.