EFRAG finalised its draft comment letter to the IASB in response to the Exposure Draft Offsetting Financial Assets and Financial Liabilities (the ED). The draft comment letter welcomes the IASB and the FASB efforts to develop joint proposals for converged requirements for offsetting financial assets and liabilities. EFRAG supports the IASB decision to use, as a basis for the converged requirements, the existing guidance for offsetting financial assets and financial liabilities in IAS 32 Financial instruments: Presentation, with some refinements.
The draft comment letter supports the proposal to clarify that the right to set off the financial asset and the financial liability must be unconditional and legally enforceable in all circumstances. These criteria are currently applied under the existing IAS 32. The draft comment letter also supports the proposal to specify the disclosure requirements about rights to offset financial assets and financial liabilities of an entity and the related arrangements, including information about collateral and master netting arrangements. However it urges the IASB to consider the proposals in the ED in the context of the existing disclosure requirements in IFRS 7 Financial Instruments: Disclosures, taking into account the disclosure proposals made in other consultation documents in respect of accounting for financial instruments. This is needed to ensure that the level of guidance included in the disclosure standard remains consistent and balanced across topics.
Press release
© EFRAG - European Financial Reporting Advisory Group
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