Deloitte (US) comment letter urges further convergence regarding classification and measurement of financial instruments

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17 May 2013

Deloitte & Touche LLP has submitted a comment letter on the FASB's proposed Accounting Standards Update (ASU) 'Recognition and Measurement of Financial Assets and Financial Liabilities' issued in February 2013. The comment letter compares the proposed ASU with the IASB’s exposure draft on proposed limited changes to IFRS 9 (2010) published in November 2012 and lists key areas where further convergence is possible.

The comment letter supports the FASB's objectives of converging the guidance on classification and measurement of financial instruments under US GAAP with that under IFRSs, reducing unnecessary complexity in the accounting for financial instruments, and requiring entities to provide more decision-useful information about their involvement with those instruments.

However, doubt is expressed that convergence between the FASB proposal and the IASB proposal has really been achieved to the degree claimed:

While certain principles in the proposed ASU and IFRS 9 may appear to be converged, some of the detailed application guidance differs in important respects. Such differences could sometimes result in very different accounting outcomes.

In support of this comment the letter contains a detailed list of significant differences between the models (Appendix A of the letter) that also includes assessments and recommendations as to which model seems to be better suited for solving the issue in each case or where further convergence is possible.

The letter comments that presenting both proposed models to the public as substantially converged may mislead investors and other financial statement users and recommends that the FASB and IASB jointly redeliberate the remaining areas of divergence to eliminate significant differences.

Please click to download the comment letter.

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