Our views on IASB's financial instruments discussion paper

  • Deloitte Comment Letter Image

20 Sep 2008

Deloitte has submitted a Letter of Comment on the IASB's Discussion Paper Reducing Complexity in Reporting Financial Instruments. In general, we express serious reservations about the possible approaches examined in the Discussion Paper.

As an alternative, our letter sets out an approach that, whilst still incorporating a mixed measurement attribute model, we believe would represent a significant improvement over the current guidance in IFRSs. Below are excerpts from our letter.

We welcome the IASB's efforts to improve financial reporting for financial instruments. We believe that current guidance under IFRS is complex and requires significant improvements to reduce the inherent complexity.

However, to meet the goal of improving reporting for financial instruments by reducing complexity it is important that complexity is properly defined and that any change made to existing Standards should not result in a mere shift of complexity from one constituent to another.

In addition, the DP fails to address important areas, notably scope and derecognition, of financial instruments accounting that also fall outside the IASB's other concurrent projects or, where they are within existing projects, these would be completed only with a significant time lag to the financial instruments project. We believe that guidance on these issues influences the assessments made on the proposals of the DP.

Furthermore, we do not agree with the implicit assumption of the DP that full fair value accounting would be the ultimate improvement to financial instruments accounting. We believe such a conclusion would be premature at this point. We believe that at the moment, amending existing Standards, possibly over a longer period, would be a feasible way to improve financial instruments accounting significantly for all constituents without undue costs or efforts.

Click to view Letter of Comment (PDF 243k). Past comment letters are Here.

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