Relevance, transparency and enforceability are key elements in the development of accounting standards. CESR believes that the IASB and prudential supervisors should try to align different reporting requirements for financial institutions as far as possible in order to reduce burden for issuers.
The Committee of European Securities Regulators (CESR) has considered, through its standing committee on corporate reporting (CESR-Fin), EFRAG‟s draft comment letter on the IASB‟s Exposure Draft (ED) Financial Instruments: Amortised Cost and Impairment.
CESR supports the IASB’s objective of developing an internationally acceptable alternative for the current incurred loss regime for impairment. The ED is an important part of the replacement of IAS 39 – Financial Instruments: Recognition and Measurement, of which IFRS 9 – Financial Instruments: Classification and Measurement, as published in November 2009, was the first part. Those documents represent a clear improvement to the present requirements of IAS 39 – Financial Instruments: Recognition and Measurement.
CESR believes that the IASB and prudential supervisors should try to align the different reporting requirements for financial institutions as far as possible in order to reduce burden for issuers. CESR, however, acknowledges that it is not possible to remove all differences and believe that, if a conflict does arise between the wide range of measures that prudential regulators may require institutions to adopt and the needs of investors, the investor‟s needs should take precedence for the development of accounting standards. EFAG believes this view to be supported by the Financial Crisis Advisory Group (FCAG). Relevance, transparency and enforceability are crucial elements for CESR in the development of accounting standards. As nforcers of IFRS, CESR also would like to stress that a standard needs to be enforceable, if consistent application is to be achieved.
CESR believes it important to emphasise strengths and weaknesses that will accompany any accounting standard and that thus no approach is „perfect‟. Having balanced those strengths and weaknesses, it is supportive of the overall direction of the IASB’s development of the model. However, there are some comments on the proposals as well as some suggestions on how the standards can be further clarified i.
As mentioned above, the IASB formed an Expert Advisory Panel (EAP) to assist with its operational issues linked to the amendments proposed in the ED Financial Instruments: Amortised Cost and Impairment. CESR is, like EFRAG, concerned about the timing and due process applied to the activities of the EAP. EFAG therefore believes that it is not possible to form a final opinion without knowing the outcome of the EAP‟s activities, which could mean changes to the standard either directly or through application guidance.
© CESR - Committee of European Securities Regulators
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