Last Updated: April 30, 2008
This project update summarizes the project activities and decisions of the IASB and the FASB (the Boards). It was prepared by the staff and is for the information and convenience of its constituents. All decisions of the Boards are tentative and do not change current accounting and reporting requirements. Decisions of the Boards become final only after extensive due process.
Discussion Paper and Invitation to Comment
On March 19, 2008, the IASB issued the Discussion Paper, Reducing Complexity in Reporting Financial Instruments (the DP). On March 28, 2008, the FASB issued the Invitation to Comment, Reducing Complexity in Reporting Financial Instruments (the ITC), which includes a copy of the IASB Discussion Paper. Comments on each document are requested by September 19, 2008.
The DP and the ITC have the same objective—to gather input from constituents to assist the Boards in determining how to proceed with reducing complexity in the current standards for reporting financial instruments. More specifically, the DP and the ITC seek input from constituents on whether there is a need for the Boards to add to their agendas projects intended to simplify and improve standards for measurement of financial instruments and, if so, what kind of projects or approaches should be considered.
For additional and current information concerning the IASB’s Discussion Paper use the link below.
As the titles of the DP and the ITC indicate, the comments they request relate to future efforts to reduce complexity in reporting financial instruments. The Boards will decide on the appropriate next steps after those are received and analyzed. Those documents do not include any specific proposals of the boards nor any tentative conclusions or preliminary views. Therefore, the first step in any future effort probably would be to express preliminary views or expose a proposed standard, although depending on the responses to the DP and the ITC, another similar set of documents may be necessary.
The FASB and the IASB have discussed standards for reporting financial instruments at most of their joint meetings since 2005. Various possibilities for projects to converge individual aspects of the two sets of standards have been discussed, but the two Boards have been unable to agree on an approach for which the benefits were judged to be worth the time and effort that would have been required of constituents to implement the changes.
At the joint meeting in April 2006, the FASB and the IASB directed their staffs to begin an effort to issue due process documents addressing issues related to many aspects of accounting for financial instruments. At the joint meeting in April 2007, the Boards agreed that the planned documents would discuss possible ways to reduce complexity in measuring financial instruments. Specifically, the documents were intended to focus on possible intermediate term steps that might be completed within three to five years. The DP and the ITC issued in March and April 2008 are the results of those staff efforts. Those documents also fulfill one of the commitments made by the two Boards in the Memorandum of Understanding issued on February 27, 2006.