This was an educational session. The Board was not asked to made decisions.

The aim of the education session was to present to the Board the project plan proposed for convergence with US GAAP and to ask for suggestions on the approach to the project. The list of convergence issues identified so far is:

• Accounting for securities sold but not yet purchased (short trading)
• Definition of a derivative
• Derecognition of financial assets
• Classification of financial assets - held to maturity
• Effective interest method
• Impairment
• Unquoted equity instruments

Generally the Board was supportive of the methodology used to identify differences and the analysis provided on these topics. The Board asked that cash flow hedge accounting be inserted into the paper as a convergence issue and that the FASB be asked to consider the IFRS requirements.

However, the Board expressed its frustration in that the differences highlighted indicated the need to not only improve the current financial instruments standards (IAS 39 and FAS 133 - the US GAAP equivalent) but also to simplify them. Some Board members believe the IASB and the FASB should work more closely and concentrate on the fundamental issues of financial instrument accounting and deal with those issues so as to eliminate the differences and inconsistencies that arise in the detail of the Standards. One of the fundamentals given as an example was whether or not all financial instruments should be measured at fair value; agreeing on this point would allow the Board to simplify the requirements of financial instrument accounting.

FASB staff agreed with the comments made (via video link) and indicated that the same issue would be discussed with the FASB on 16 March. The IASB suggested that these issues be discussed at the joint meeting of the two Boards in April.