IASB Update

24 March 2005

The International Accounting Standards Board met in London on 15 and 17 March. Participants at the roundtable meetings indicated their overall support for the possible new approach on Fair Value Option. Issues discussed included the so-called ‘accounting mismatch’ and the requests to allow a ‘reasonable delay’ in assembling a portfolio of financial assets and liabilities when an entity wishes to use the fair value option to eliminate or significantly reduce an accounting mismatch.

With regard to the convergence with US GAAP, the Board held a session on a draft project plan proposed for converging some of the requirements of IAS 39 with corresponding US accounting requirements for financial instruments. The Board did not make any technical decisions.

Several Board members suggested that the Board should consider the long-term objective for improving financial instruments accounting is before proceeding to specific convergence issues. The simplification of accounting standards on financial instruments should be an important criterion for determining whether a topic is included in the convergence project.

The staff should identify financial instruments topics that are regarded as especially troublesome when reconciling IFRS financial statements with US GAAP. The elimination of reconciling items should not be the only criterion for including items in the short- or medium-term convergence project.

The staff should analyse the following topics for inclusion in the medium-term convergence project:
(a) impairment of financial instruments other than loans;
(b) extending to US GAAP the portfolio-based cash flow hedge accounting model in IFRSs.

The next meeting will take place on 18—22 April.

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