IASB and FASB expect to issue revised proposals on impairment by the end of January 2011

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14 Jan 2011

The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) have announced their intention to publish a proposed joint approach on credit impairment of loans and other financial assets managed in an open portfolio by the end of January 2011.

The IASB and the FASB originally published separate proposals on credit impairment of financial assets. Although both boards proposed moving to a more forward-looking approach to accounting for impairment they proposed different models. Following joint discussion of the responses each board received on its original proposals, and requests by the Group of 20 (G20) Leaders, the Financial Stability Board, the Basel Committee on Banking Supervision and others to achieve convergence in this area, the boards expect to propose a common approach that incorporates elements of each of their original models.

The boards will propose an impairment model based on accounting for expected losses. This approach provides a more forward looking approach to accounting for credit losses.

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