Discussion Paper on financial instruments
20 Mar 2008
The IASB has published for comment a Discussion Paper (DP) on Reducing Complexity in Reporting Financial Instruments.
The DP examines the main causes of complexity under IFRSs today – such as "many alternatives, bright lines, and exceptions that often obscure the underlying principles". The DP concludes that the long-term solution is a single measurement principle for all financial instruments within the scope of a standard, and explains why "fair value seems to be the only measurement attribute that provides relevant information for all types of financial instruments". However, many issues and concerns must be addressed before a general fair value measurement requirement could be introduced. Consequently, the paper suggests possible intermediate approaches that would improve and simplify measurement and hedge accounting requirements relatively quickly – including any or a combination of:
The DP is the first step in an IASB project that would replace IAS 39. The DP is being published by the IASB. However, it will also be considered for publication by the US Financial Accounting Standards Board for comment by its constituents. The IASB requests responses to the DP by 19 September 2008. Click for Press Release (PDF 79k).
- Amending the existing measurement requirements in IAS 39, for instance, by reducing the number of categories of financial instruments
- Replacing the existing IAS 39 measurement requirements with a fair value measurement principle and some optional exceptions to fair value measurement
- Simplifying hedge accounting
The DP is organised as follows:
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