CESR comments on IASB’s Exposure Draft Financial Instruments: Classification and Measurement
17 September 2009
CESR believes that it is crucial that the IASB and the FASB work together to make sure that IFRS and US GAAP are fully converged in the area of financial instruments accounting. There is divergence at the moment.
CESR agrees with the IASB that in some circumstances the application of the complex requirements in the current IAS 39 has resulted in unnecessary confusion for preparers and users of financial statements and therefore welcomes the IASB’s publication. However, the IASB’s decision to divide its project into three phases makes it difficult in CESR’s opinion to:
- ensure that all the issues identified by governments, users and regulators during the turmoil are being or will be addressed during the course of the whole project; and
- comment on the Board’s proposal on classification and measurement without knowing the changes that will be made to impairment and hedge accounting in phases two and three of the project.
CESR believes that it is crucial that the IASB and the FASB work together to make sure that IFRS and US GAAP are fully converged in the area of financial instruments accounting. CESR believes that it would have been preferable for the IASB to have come up with a comprehensive and joint solution on financial instruments.
CESR agrees that the way financial assets (or liabilities) are managed (sometimes called business model) is highly relevant in determining the extent to which amortised cost provides decision-useful information to users. The IASB should consider whether to give more prominence to this criterion.
CESR is supportive of the principle that in general all equity instruments should be measured at fair value. That said, CESR also recognises that sometimes the fair value of an equity instrument might be difficult to assess reliably, for instance, when the equity instrument is not quoted on an active market or when the market has become illiquid.
© CESR - Committee of European Securities Regulators
