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Deloitte comment letter on ED/2010/1 'Measurement of Liabilities in IAS 37'

Published on: 18 May 2010

We disagree with the Board’s decision to limit re-exposure of the revised IAS 37 to the revised measurement proposals only, and not provide constituents with an opportunity to comment on the entire draft Standard. The aspects of the proposals in the 2005 Exposure Draft to which we (and many other respondents) were strongly opposed were not limited to the measurement guidance. Furthermore, to express a view on the proposed measurement guidance in the 2010 Exposure Draft, it is fundamental that the scope, definitions and recognition criteria, to which this guidance is expected to apply, are understood. The Board made the entire draft Standard publicly available on 19 February 2010 but has given respondents no formal opportunity to comment on other aspects of the draft Standard, which may have a bearing on the measurement guidance if adopted as proposed. In so doing, we do not believe that the Board has adhered to the spirit of due process.

We comment in a separate letter on other aspects of the draft Standard. However, we believe that the proposed change to the recognition criteria is so significant and so inextricably linked to the measurement guidance that it also warrants comment here.

We disagree with the removal of the probability of outflow from the recognition criteria, as we believe this is a practical and well understood test for determining whether a liability should be recognised.

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