Reconsideration of effective dates

The IASB had previously tentatively decided that both the clarifying amendments to IAS 32 and the new disclosures requirements on offsetting of financial instruments should be effective for annual periods beginning on or after 1 January 2013.

The staff has subsequently received concerns by preparers regarding the effective date of both the disclosure requirements and the clarifying amendments to IAS 32.

With respect to the new disclosure requirements, some IFRS constituents believe that an effective date of 1 January 2013 with retrospective application would be overly burdensome given the likely issuance date of late 2011. They cited the fact that when the offsetting criteria in IAS 32 are not met, those entities may not have such information readily available in their financial reporting systems. They also noted that information on collateral is typically kept within credit systems rather than the financial reporting system.

However, the Board had little sympathy in providing and relief regard effective date voting 14-1 in favour of retaining an effective date of 1 January 2013 with retrospective application for the new disclosure requirements.

Constituents have also raised concerns on the clarifying amendments to IAS 32 and the 1 January 2013 effective date with retrospective application required. They assert they will have to go back and obtain additional evidence to applying offsetting. Additionally, some believe that the clarification may have a material impact on the statement of financial position as they may not be able to obtain appropriate evidence for prior years and therefore would need to unwind amounts that have previously been offset, which could result in additional reporting requirements such as presentation of as many as five years' of comparative data. They have also raised the issue of systems modifications that will be required in order to comply with the clarifying amendments.

The Board had mixed views with respect to providing additional implementation time for the clarifying amendments to IAS 32. Some supported the staff recommendation to delay the effective date for the clarifying amendments to 1 January 2015 in order to synchronise with the implementation of IFRS 9. One Board member cited his recommendation during the September 2011 board meeting that these amendments should be subject to re-exposure because of the potentially significant change they may have for some constituents. Another Board member expressed his support saying that the feedback he had received was that certain constituents would require systems modifications. However, other Board members were strongly opposed to delaying the effective date until 2015 citing that this project was resulting from the financial crisis and that implementation should not be delayed. Some of them preferred an effective date of 2013 but not requiring retrospective application if that would alleviate the constituent concerns. However, the staff said they viewed have comparative periods restated as essential for comparability purposes. One Board member suggested an alternative effective date of 1 January 2014 which received some amount of support.

The Board first voted on the staff recommendation to delay the effective date until annual periods beginning on or after 1 January 2015 but did not support the recommendation. The Board then considered whether it could support an effective date of 1 January 2014 and the Board tentatively agreed on such an approach with 9 Board members supporting this recommendation.