The proposals form part of a wider project to reform accounting for financial instruments, and are part of the Classification and Measurement phase of that project. The IASB published new classification and measurement requirements for financial assets in 2009 and for financial liabilities in 2010. However, in January 2012 the IASB decided to consider limited amendments in order to:
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clarify a narrow range of application questions;
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reduce key differences with the US Financial Accounting Standards Board’s (FASB) tentative classification and measurement model to achieve increased comparability internationally in the accounting for financial instruments; and
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take into account the interaction between the classification and measurement of financial assets and the accounting for insurance contract liabilities.
Because IFRS 9 is fundamentally sound and because some entities have already adopted or prepared to adopt IFRS 9 as previously published, the IASB sought to minimise changes to the requirements. The amendments are therefore consistent with the business model driven classification structure in IFRS 9. The Exposure Draft proposes the introduction of a fair value through other comprehensive income (FVOCI) measurement category for debt instruments that would be based on an entity’s business model.
IASB Chairman Hans Hoogervorst said: “We were clear when IFRS 9 was introduced in 2009 that it would be necessary to consider revisiting the interaction between IFRS 9 and the Insurance Contracts project once the insurance contract model was developed sufficiently. In addition, this limited-scope review has given us an opportunity to propose aligning IFRS and US GAAP more closely, in this important area of financial reporting.”
Press release
Exposure draft
© IASB - International Accounting Standards Board
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