EFRAG comments on CESR draft Statement on fair value
18 September 2008
EFRAG members were concerned about CESR’s positioning of the statement and suggest that CESR repositions its Statement as input to the IASB, rather than providing guidance to preparers.
EFRAG members were concerned about CESR’s positioning of the statement and suggest that CESR repositions its Statement as input to the IASB, rather than guidance to preparers. Amongst other things, that would help to emphasise that it is the IASB that should be the body that first responds to the accounting issues arising as a result of the current market turmoil.
Also, the starting point should be for the IASB to develop good principle-based requirements and terminology on what is meant by an active market and an inactive market, EFRAG notes.
In the draft Statement, CESR discusses a number of issues that have come to its attention in the aftermath of the recent market turmoil, including:
- how to determine for the purposes of IAS 39 whether or not a market is active;
- which if any quoted prices IAS 39 require to be used to measure instruments traded in relatively illiquid markets;
- the inputs that are relevant when no active market exists and the fair value of a financial instrument “linked to the subprime crisis” needs to be estimated using ‘valuation techniques’;
- the information that needs to be disclosed to enable users to understand the impact of particular transactions, other events and conditions during such times.
Comment letter
© EFRAG - European Financial Reporting Advisory Group
