IASB finalises enhanced derecognition disclosure requirements for transfer transactions of financial assets

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06 Oct, 2010

The International Accounting Standards Board (IASB) today issued amendments to IFRS 7 'Financial Instruments: Disclosures' as part of its comprehensive review of off balance sheet activities.

The amendments will allow users of financial statements to improve their understanding of transfer transactions of financial assets (for example, securitisations), including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period.

The IASB had originally proposed to replace the existing derecognition model in IAS 39 Financial Instruments: Recognition and Measurement and the associated disclosure requirements in IFRS 7. However, in light of the feedback received, the IASB decided to retain the existing derecognition requirements and to finalise improved disclosure requirements.

The amendments also broadly align the relevant disclosure requirements of IFRSs and US GAAP.

Entities shall apply the amendments for annual periods beginning on or after 1 July 2011. In the first year of application, comparative information are not required.

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