Closer than you think

Article Abstract:

The International Accounting Standards Committee (IASC) has initiated two projects on financial instruments. One involves an interim solution on recognition and measurement standards while the other is a more in-depth and longer-term standard on financial instruments, which is being jointly developed with standard organizations in 13 countries. The interim solution requires marking to market certain financial assets and only derivative financial liabilities, and allows reporting of most fair value changes in equity until the sale or extinction of the asset or liability. An exposure draft has already been submitted. It proposes that all companies with publicly traded securities be included. It requires all financial assets and liabilities, including derivatives to be acknowledged on the balance sheet. The fair value of consideration paid or received will be used for the initial measurement.

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E 62 and the notorious 38

Article Abstract:

A board member of the Financial Accounting Standards Board (FASB) has identified '38 substantive differences' between US standards for financial instruments and the International Accounting Standard Committee's (IASC) Exposure Draft E 62, 'Financial Instruments: Recognition and Measurement.' Examination of this list reveals six major differences. These are in the areas of scope, transaction cost, unrealized fair value changes on non-trading financial assets, test for classification as held to maturity by category, reversal of impairment write-down and non-derivatives as hedging instruments. One major difference not mentioned by the FASB board member is the degree of detail in the IASC's E 62 and the FASB's corresponding standards.

Financial Accounting Standards Board

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