Amendments to IAS 39:

Date recorded:

The Fair Value Option

Since the Board's last discussion in January, the staff redrafted the possible new approach in the light of constituents' comments, and this was presented to the Board. The redrafted document will be taken to the round-table discussion scheduled to take place in London on Wednesday 16 March 2005, in public session. Due to time constraints, only certain constituents (approximately 30) would be invited to participate at those round-table discussions.

It was indicated that some discussions had taken place with representatives of the Basel Committee and the ECB during which useful clarifications had been made of the concerns expressed previously with regards to the fair value option in IAS 39. Those clarifications had been incorporated into the redrafted document. The purpose of the round-table discussions was to solicit input from other constituents to ensure that the proposal was appropriate for all.

Some Board members questioned whether the regulators had provided assurances that the redrafted document adequately addressed their concerns such that the Board could expect for the round-table discussions to be conclusive.

As regards the actual redrafting, the Board debated at length whether some of the terminology and the examples could be misinterpreted (for example, the word 'mismatch' and the example in paragraph AGX5 which was viewed by some as unclear regarding the level of reduction required of the mismatch, that is, whether it is a 'greater reduction' or just a 'reduction'). An inconsistency was identified in this paragraph with the requirements in the redrafted paragraph 9 which refers to 'eliminates or significantly reduces a measurement or recognition inconsistency'.

After much debate, there was general agreement that the proposals should refer to an 'accounting mismatch'.

Correction list for hyphenation

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