'Credit Crunch' in the Global Financial Markets - Standard-setters responses to the credit crisis IASB and FASB

The boards discussed the steps they were taking in response to the credit crisis.

When there are significant business failures, or a loss of confidence in markets, it is appropriate to examine whether improvements can be made to the system in which those businesses operate. Just as securities regulators, banking supervisors and others have been assessing their roles in the crisis, it is appropriate that the boards review the requirements of IFRS and US GAAP.

The FASB is moving to eliminate the concept of a qualifying special purpose entity and amend FIN 46R to place more emphasis on qualitative, and therefore less reliance on quantitative, factors in assessing control. Part of that project, which the FASB expects to complete before the end of this year, is a review of disclosure requirements related to securitisations and off-balance sheet activities.

The IASB is giving urgency to several areas where it thinks IFRS financial reporting could be improved - fair value measurement; financial instruments; consolidation and derecognition; disclosures about off-balance sheet items; and disclosures about fair value measurements.