At its September meeting the Board considered a pre-ballot draft of an Exposure Draft proposing amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Exposure Draft had been developed with two objectives - the first converging with the requirements of FAS 146 Accounting for Costs Associated with Exit or Disposal Activities and the second to redefine contingent liabilities for the purposes of co-ordination with the Business Combinations Phase II project.

At the September meeting the Board discussed briefly whether this document should be issued as a proposed revision to IAS 37 or as a proposed new IFRS. The Board asked the staff to consider this issue, and also determine what other aspects of IAS 37 would need to be revisited in a bigger project. The staff presented a paper providing a comprehensive outline of items that would need to be revisited if IAS 37 were going to be revised in its entirety (rather than just by reference to two specific objectives). The Board agreed that endeavouring to address these issues at this time would result in delaying the progress of convergence with US GAAP and the Business Combinations II project. Accordingly it was decided that the Board would expose changes related to these objectives, together with incidental changes, rather than a proposal for a comprehensive overhaul of accounting for provisions and contingencies.

The Board considered whether it would be more appropriate to issue this document as a proposed revision to IAS 37 or a proposed IFRS. This matter, and the respective merits of IAS and IFRS, was debated at length. The Board noted from staff that even re-drafting the standard as an IFRS rather than an IAS would result in a significant extension of the time required to complete the project, and accordingly is not appropriate at this time. The Board noted that such an exercise would necessarily require the Board to revisit the measurement objective which is not consistently described throughout the standard.