Link: IAS special report
The release, said the IASB, is a direct response to concerns expressed by prudential supervisors of banks, securities companies and insurers that the fair value option in IAS39 might be used inappropriately.
The exposure draft proposes to limit the financial assets and financial liabilities to which the option may be applied, without damaging the benefits of the option.
The board also announced that separate from the release, discussions were continuing on another aspect of IAS39, namely an additional hedging methodology and the balance sheet presentation of certain hedges.
‘This proposed amendment results from a constructive dialogue with banking supervisory authorities,’ said IASB chairman Sir David Tweedie. ‘It has the dual aim of meeting concerns that the fair value option might be used inappropriately while continuing to allow companies to use the option in appropriate cases to simplify the practical application of IAS39. We shall welcome comments on whether the proposals achieve these two aims.’
The consultation period for the exposure draft closes on 21 July.
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