Son(s) of IAS 39 project - IASB intends to replace IAS 39 in piecemeal fashion

A couple of months ago the International Accounting Standards Board (IASB) announced that part of its response to the credit crunch would be to accelerate its work on a replacement standard for IAS 39 “Financial Instruments: Recognition and Measurement”. This work, that has been taking place for more than a year, had been intended to result in new converged standard with US GAAP. However, in a meeting on 20 May 2009 the IASB decided to significantly accelerate again the work on that project.

At its 20 May 2009 meeting the Board decided to split the work on the new financial instruments standard into separate sub streams and publish a series of exposure drafts one after the other. It is not yet known what these will contain but it is likely that the order and possible publication dates would be as follows:

  • Classification of financial instruments – an exposure draft is scheduled in July 2009. This could reduce the number of measurement categories for financial assets and liabilities from the current six (four for assets and two for liabilities), possibly to as few as two, based on “at amortised cost or similar” and “at fair value through profit or loss”. The comment period is expected to be 60-90 days.  The final classification standard is expected to be issued by the end of 2009, and may be effective as soon as 2010.
  • Impairment of financial instruments – a request for views with a short comment period is expected in July, possibly to be followed by an exposure draft later in the autumn.
  • Hedge accounting, scope, embedded derivatives – an exposure draft may be issued in the last quarter of 2009.

Given the importance of financial instruments accounting for treasurers, I aim to keep this blog updated for the latest developments as they take place. Clients and others are encouraged to comment on these developments using the comments window in this blog below and / or by responding directly to the IASB. Please don’t hesitate to get in touch with me directly if you have any comments.