IASB and FASB Seek to Reduce Differences in Classification and Measurement Models for Financial Instruments

January 30, 2012 /

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) agreed to work together to seek to reduce differences in their respective classification and measurement models for financial instruments.

The discussions will form part of the FASB’s ongoing redeliberation of a proposed Accounting Standards Update on financial instruments, which was originally issued in May 2010.

The IASB will consider these discussions as part of its project to undertake limited-scope changes to IFRS 9, Financial Instruments, issued in November 2009 and amended in October 2010, resulting from its ongoing work to develop a new IFRS on insurance contracts and the feedback received on application of IFRS 9 to particular instruments.

The boards will work together with the objective of more closely aligning key aspects of their classification and measurement models.

The boards will explore these key aspects jointly, and then decide whether to issue proposed amendments to IFRS 9 and U.S. Generally Accepted Accounting Principles (U.S. GAAP), respectively.

IASB Chairman Hans Hoogervorst said: “When IFRS 9 was introduced in 2009 we said that further amendments might be required once the direction of travel on insurance contracts became clear. We are now at that point.

“At the same time, this limited-scope review now presents an ideal opportunity to align IFRS and US GAAP more closely, in this important area of financial reporting.

“We will proceed with caution, recognising the investment that many jurisdictions have made in preparing for the introduction of IFRS 9 in 2015.”

FASB Chairman Leslie F. Seidman said: “The boards have been urged to converge their standards on financial instruments. Today’s decision to work together on key differences—which represent the most significant remaining differences between the decisions reached to date—is responsive to stakeholders in the US and abroad.

“The boards will share the feedback they have received on their respective decisions and strive to develop a more closely converged approach that addresses those concerns.

“The boards will continue to develop a common approach on impairment of financial assets, which is being handled as a separate work stream. As part of their project on financial instruments, the FASB is proposing enhanced disclosures about interest rate risk and liquidity, which under IFRS are covered by IFRS 7, Financial Instruments: Disclosures.”


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