Report of the IASB Chairman

Date recorded:

Hans Hoogervorst noted that he had provided a detailed written report with supporting appendices. He limited his remarks to highlighting some issues:

  • He noted that the Offsetting chapter of IFRS 9 had been issued and that the IASB and the FASB had ended in different places, with disclosures being required to bridge the two standards.
    Clemens Börsig observed that the balance sheet ratios of IFRS-compliant banks and US GAAP-compliant banks would be quite different and asked whether there was any flexibility on the IASB 'to give in' [and adopt the US GAAP position]? Mr Hoogervorst agreed that disclosures were a substitute for a compromise, but to adopt the US position, the IASB would have had to change its unanimous position. The FASB would have need only one vote to change to adopt the IASB's position. Mr Börsig had sympathy for the FASB position, but Mr Hoogervorst provided a robust response, noting that, in his experience as a regulator (shared with Michel Prada, the IFRSF Chairman) accounting scandals involving banks almost always featured inappropriate balance sheet offsetting. The IASB had been unanimous in choosing a gross presentation. He noted that a net presentation on the balance sheet gives a 'very incomplete view' of the risk in the balance sheet
  • Mr Hoogervorst noted that the mandatory effective date for IFRS 9 had been deferred to 1 January 2015. He also noted that in November 2011 the board agreed to consider modifying IFRS 9 particularly in view of convergence and the insurance contracts project. However the Board noted that any changes should be made in a manner that minimises disruption for those who have already started to apply or were close to applying IFRS 9. The Board also noted that IFRS 9 is fundamentally sound and that the project should be completed expeditiously. In December, the Board tentatively decided to limit the items to be reconsidered to the contractual cash flow characteristics criteria, whether bifurcation for financial assets should be reconsidered and whether changes in the fair value for some debt instruments should be presented in OCI (other comprehensive income)
  • Leases is still in development and the IASB hopes to have revised proposals on this topic later in 2012. The revised proposals on Revenue were out for re-exposure
  • Insurance, although not a convergence project, was a project on which common accounting between IFRS and US GAAP issuers was highly desirable. US insurers were lobbying the IASB hard to retain the current US GAAP accounting. The IASB was reluctant to make this a joint project as this would delay the issue of an IFRS by several years. He noted that it would be nice to achieve convergence 'from the bottom up', but that there was 'no substitute for clear decisions from the top down'.

In response to a question from Mr Yves-Thibault de Silguy, Mr Hoogervorst noted that the IASB's Agenda Consultation had concluded the public comment phase, but the staff analysis was not yet available. However, in conversations with constituents he noted that a 'period of calm' in standard-setting, work on the IASB Framework, the use of Other Comprehensive Income and some 'new IFRS jurisdiction' problems were frequent issues raised and were likely to feature in a future Agenda.

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