IASB enhances the IFRS 7 financial instruments disclosures

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05 Mar 2009

The IASB has issued 'Improving Disclosures about Financial Instruments (Amendments to IFRS 7)'.

The amendments require enhanced disclosures about fair value measurements and liquidity risk. Among other things, the new disclosures:
  • clarify that the existing IFRS 7 fair value disclosures must be made separately for each class of financial instrument
  • add disclosure of any change in the method for determining fair value and the reasons for the change
  • establish a three-level hierarchy for making fair value measurements:
    • Level 1. quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
    • Level 2. inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices) (Level 2); and
    • Level 3. inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
  • add disclosure, for each fair value measurement in the statement of financial position, of which level in the hierarchy was used and any transfers between levels, with additional disclosures whenever level 3 is used including a measure of sensitivity to a change in input data
  • clarify that the current maturity analysis for non-derivative financial instruments should include issued financial guarantee contracts
  • add disclosure of a maturity analysis for derivative financial liabilities
Entities are required to apply the amendments for annual periods beginning on or after 1 January 2009, with earlier application permitted. However, an entity will not be required to provide comparative disclosures in the first year of application. Here is the IASB Press Release (PDF 45k).


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