IASB-FASB study fair value for financial instruments

  • IASB (International Accounting Standards Board) (blue) Image

07 Mar 2006

The IASB and the US FASB are jointly requesting input from users of financial statements about the kinds of information about fair values of financial instruments, and changes in those fair values, that is useful to those making investment or credit decisions or advising others on investment or credit decisions.

For this purpose, financial instruments include not only debt securities, equity securities, and derivatives, but also loans and accounts payable or receivable, and almost any other amount payable or receivable. The Boards have issued a questionnaire and related background paper aimed at seeking users' views about whether current standards provide the information that investors and creditors need to analyse companies that report some or all financial instruments at fair value. The Boards cite the following as examples of possible additional information that users may need:
  • Quantitative information about the reasons why the fair values of financial instruments changed.
  • Disclosure of exposures to future changes in the fair values of financial instruments.
The questionnaire has five questions with various sub-questions:
  • Question 1 asks users about how they currently use fair value information about financial instruments and what information they wish they had but do not currently receive
  • Question 2 asks about the kinds of information users of financial statements would like to help them understand the reasons why fair values changed during a period
  • Question 3 asks about reporting interest income and expense for financial instruments measured at fair value and whether such interest should reflect current market cost/return and credit quality
  • Question 4 asks how users assess exposure to future changes in fair values of financial instrument
  • Question 5 asks about the relative importance of different types of information that should be required

Responses are requested by 14 April 2006. Click for:

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