Fair Value Measurement

Date recorded:

The Board considered whether an IFRS on fair value measurement should exclude IFRIC 13 Customer Loyalty Programmes from its scope. After the IFRIC meeting in March, After the IFRIC meeting the staff became aware of a potential conflict between IFRIC 13 and the proposed fair value measurement guidance. This issue was not raised in any of the comment letters on the exposure draft ED/2009/5 Fair Value Measurement.

For various reasons, the staff had concluded that the use of the term 'fair value' in IFRIC 13 was consistent with the proposed fair value measurement guidance in the forthcoming IFRS on fair value measurement. Consequently, they recommended that the fair value measurement IFRS exclude IFRIC 13 from its scope. This approach would result in IFRIC 13 using the term 'fair value' and retaining the current definition of fair value. However, even though IFRIC 13 refers to 'fair value', transactions within the scope of IFRIC 13 would not be subject to the measurement and disclosure requirements of the IFRS on fair value measurement.

The Board disagreed with the staff on a number of levels. Board members were unconvinced by the staff's analysis and the suggestion that the revenue recognition project would address the issues in IFRIC 13 satisfactorily. To exempt IFRIC 13 from the fair value measurement IFRS would send the wrong message and could lead to regressive practices. The last thing the Board needed to do when it issued the IFRS was to send incoherent signals along with it.

The staff recommendation was defeated. IFRIC 13 will be within the scope of the IFRS on fair value measurement.

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