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Financial Activities

Date recorded:

The IASB's advisory committee on disclosure of financial activities has recommended:

  • a financial risk disclosure principle and requirements applicable to all entities
  • three balance sheet and income statement disclosure requirements
  • a plan for moving the project forward.
The Board expressed general support for the advisory committee's recommendations.

Financial risk disclosure principle and requirements

Qualitative and quantitative information would be required about:

  • credit risk
  • quality of assets - past due and impaired financial assets
  • liquidity risk
  • market risk.
The Board tentatively agreed that the disclosure of capital requirements imposed by external parties (for example, a regulator) should be required and asked the advisory committee to continue to develop a capital requirements disclosure principle.

Operational risk disclosure

The advisory committee had recommended certain operational risk disclosures that the Board concluded would better be addressed in the Board's planned narrative reporting (MD&A;).

Balance sheet and income statement disclosures

The Board discussed the following proposed disclosures:

  • balance sheet amounts based on the measurement basis of the financial asset
  • and/or financial liability;
  • income statement amounts based on the measurement basis of the financial asset and/or financial
  • liability; and
  • information about the loan loss allowance account
The Board expressed general support for them.

Project plan

The Board concluded that it is not likely that these proposals can be adopted in time for application in 2005 (when Europe, Australia, and perhaps other jurisdictions will be adopting IFRS for the first time). The plan, therefore, is to develop an Exposure Draft that would be effective after 2005, perhaps with earlier adoption permitted or encouraged. Eventually, the principles and requirements in the Exposure Draft could be merged with IAS 32 and IAS 39 into a single financial instruments standard.

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