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IASB Tinkers With IFRS 9: Financial Instruments

by Robert Lee, Tax-News.com, London

05 December 2012


The International Accounting Standards Board (IASB) has launched a consultation on limited changes to the classification and measurement requirements for financial instruments under International Financial Reporting Standards 9: Financial Instruments.

The accounting standard IFRS 9 sets out the requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items.

The new Exposure Draft follows the publication by the IASB of new classification and measurement requirements for financial assets in 2009 and for financial liabilities in 2010. Most of the requirements for financial liabilities were carried forward unchanged from International Accounting Standards (IAS) 39, the standard that IFRS 9 is to replace. However, the newly announced amendments consider limited amendments in order to:

  • Clarify a narrow range of application questions;
  • 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,
  • To take into account the interaction between the classification and measurement of financial assets and the accounting for insurance contract liabilities.

Due to IFRS 9 being fundamentally sound and because some entities have already adopted or prepared to adopt IFRS 9 as previously published, the IASB explained that it sought to minimise changes to the requirements in its latest draft. The amendments are therefore consistent with the business model driven classification structure in IFRS 9.

Upon completion of the new consultation, the IASB intends to re-deliberate the proposals and expects to complete this project, along with the connected Impairment and General Hedge Accounting projects, during 2013.

The introduction of IFRS 9 was initially intended for annual periods beginning on or after January 1, 2013, but was deferred on December 16, 2011, to January 1, 2015, although the early application of IFRS 9 is permitted.

TAGS: generally accepted accounting principles (GAAP) | Insurance | business | accounting | insurance | International Accounting Standards Board (IASB) | international financial reporting standards (IFRS) | financial reporting | standards

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