EFRAG argues that the focus of the IASB’s work on derecognition should for the time being be to address the crisis-related issues arising from the existing derecognition model, and making other incremental changes.
In its draft comment letter, EFRAG argues that the focus of the IASB’s work on derecognition should for the time being be to address the crisis-related issues arising from the existing derecognition model and to make whatever other incremental changes can be made to the existing requirements that will clearly improve the quality of information provided and/or make them easier to apply. EFRAG believes that the main crisis-related issues arising from the IFRS existing derecognition model relate to disclosures and argues that improving disclosure requirements should be the priority for now.
EFRAG has significant reservations about the proposals for a new derecognition model in the Exposure Draft. With regard to the approach described in the Exposure Draft as the Alternative Approach,
EFRAG notes that while that approach has conceptual merits, it goes far beyond the crisis-related issues and incremental changes needed.
EFRAG is therefore strongly against the Alternative Approach being implemented at this time.
EFRAG points out that a more comprehensive piece of work on derecognition needs to be done that would need to address at a conceptual level such issues as the asset definition, the unit of account, the role of risks and rewards and the purpose of the balance sheet employing a comprehensive debate and field testing.
© EFRAG - European Financial Reporting Advisory Group
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