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Fair Value Measurement

Date recorded:

The Board discussed potential re-exposure of the Fair Value Measurement ED based on the tentative decision to require a disclosure of the effects of interdependencies or correlation of inputs in the fair value sensitivity analysis as discussed at the March Board meeting. The staff noted that the Board already agreed to publish a Request for Views based on the FASB ED that would propose changes to the current guidance in US GAAP and point out remaining differences between US GAAP and IFRSs. Therefore, limited re-exposure would not influence the project timetable. Board members saw benefit in re-exposure in gaining feedback on cost-benefit analysis of the proposed disclosure of the sensitivity analysis. One Board member noted that without the correlation, disclosure of sensitivity analysis could be misleading and, therefore, the Board should ask whether constituents prefer to have a full sensitivity analysis (reflecting correlations) or not to have it at all.

One Board member was concerned that the Request for Views could be viewed as an invitation to comment on issues already re-deliberated. Other Board members disagreed as they viewed the FASB ED as a convergence project with questions aimed at remaining differences.

Another Board member asked whether the ED should not also ask a question on offsetting market and credit risk portfolios. The Board disagreed as it viewed it as not changing the current practice in IAS 39 Financial Instruments: Recognition and Measurement. In addition, most of the Board members acknowledged that in case constituents have serious issues with those proposals, they would comment even without a formal invitation to comment.

Finally, the Board decided to re-expose an ED limited to the correlations in the sensitivity analysis at the same time as the Request for Views based on the FASB ED. The Board decided to align the comment period with the FASB's. The Board expects to publish the ED and the Request for Views at the end of May with the comment period ending in the middle of August. One Board member disagreed as he would prefer no re-exposure of the proposals, only the Request for Views based on the FASB ED (which would include a question on sensitivity analysis) to avoid duplication of questions.

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