IFRS Foundation Due Process Oversight Committee (DPOC)

Date recorded:

David Sidwell, Chairman of the Due Process Oversight Committee (DPOC), noted that the Committee was trying to do more rigorous and timely oversight, while maintaining a balance between oversight and impinging on the technical debate. The Committee has met monthly since April and publishes a précis of its discussions shortly after each meeting.

He noted that the Committee had been involved in and understood the reasons for the announcement on 14 April by the chairs of the IASB and FASB on the timing of delivery of the four major standard-setting projects. He also noted that the Committee had reviewed and cleared the due process that supported the recently-issued IFRSs (IFRSs 10-13, etc). A feedback statement, including an effects analysis on joint arrangements should be released on 14 July.

Looking forward, the DPOC has reviewed the planning for the post-implementation review of IFRS 8 Operating Segments. This will be a test case for post-implementation reviews and the DPOC will seek to learn from it as it prepares subsequent post-implementation reviews.

Mr Sidwell noted that the Advisory Council and the Interpretations Committee are also in the DPOC’s sights as the Committee seeks to review the Council and the Interpretations Committee. He stated that the Advisory Council would be consulted explicitly on the forthcoming agenda consultation. The Council had already been pro-active in providing input to the IASB and the DPOC and the Council wanted this engagement to continue.

Hans Hoogervorst, IASB Chairman, made some comments on the major projects and on financial instruments in particular. He noted that the existing IAS 39/ FASB incurred loss model was not forward-looking enough and that IAS 39 Financial Instruments: Recognition and Measurement was ‘too restrictive’. That said, even under IAS 39, impairment triggers [on sovereign debt] have been met, but the application of the Standard had been inconsistent. He explained that under IAS 39, most sovereign debt is classified as available for sale and that IAS 39 produces a ‘cliff effect’ when an impairment occurs. Under IFRS 9 Financial Instruments, sovereign debt could be measured at amortised cost. IFRS 9 has rigorous impairment rules that were just as rigorous as those in IAS 39, but IFRS 9 avoids the cliff effect in IAS 39.

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