Sir David Tweedie, Chairman of the International Accounting Standards Board (IASB), provides an update on what has been achieved, as well as the work ahead of the IASB.
The reform of financial instruments accounting is one of the most important and complex projects the Board is undertaking. The project was accelerated at the request of the G20 and others, and good progress has been made in a short period of time.
The Board is acutely aware of the importance of this project, and the need to work in close co-operation with those responsible for other aspects of the global financial system (such as regulators, policymakers and other interested parties). At each stage, the IASB has sought to consult widely, to consider this input as part of the Board’s deliberations, and to feed back to respondents how their views were considered and the rationale for the decisions taken by the Board. The condensed timetable has meant that aspects of the IASB’s work have needed to be developed in real time, with levels of consultation far in excess of that required by the Board’s formal due process. This more intense form of consultation has been very well received by interested parties – so much so that the IASB is in the process of applying this approach to other important projects.
Responding to requests from the G20 and others to address urgent issues, whilst also undertaking a comprehensive overhaul of the accounting for financial instruments, the IASB split the project to replace IAS 39 Financial Instruments: Recognition and Measurement into three phases. Once completed, each will be incorporated into a new financial instruments accounting standard known as IFRS 9 Financial Instruments. IAS 39 will have been replaced in its entirety once the third and final stage of the project has been completed.