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The information needs of capital market participants are not the same as those of prudential regulators, EFRAG says in its comment letter to the joint IASB/FASB working group.
It is of fundamental importance that those different information needs mean different financial reporting objectives, and that could be different reporting, EFRAG underlines adressing the need for a debate about financial reporting.
With regard to the pro-cyclicality aspects of existing accounting practices EFRAG encourages the IASB to have a careful look at the causes. EFRAG belives that the causes of pro-cyclicality can be found in the area of fair value measures and loan loss provisioning. Also, disclosure of off-balance sheet risk and whether such risks should remain off-balance sheet is another important area that needs to be investigated carefully, EFRAG notes.
Deadline for comments is 30 March 2009
The draft comment letter is attached below.