The International Accounting Standards
Board (IASB) and the US Financial Accounting Standards Board (FASB)
appear to be edging closer to converging financial instruments
FASB chairman Robert Herz said this month that
the board is seeking ways to “bridge the divide” between opposing
views on measurement methods.
IFRS 9 Financial Instruments, published by the
IASB last month, offers a mixed measurement model where amortised
cost and fair value are used in different circumstances.
Speaking with The Accountant on the
release of the standard, European Financial Reporting Advisory
Group chair Stig Enevoldsen suggested one reason behind the EC’s
controversial delayed endorsement of the standard was the
borderline between amortised cost and fair value favoured fair
value too much. He said a minor shift towards amortised cost would
please a lot of people in Europe.
On the other side of the Atlantic, the FASB
seemed set to propose a full fair value model. Sandra Peters, who
heads the CFA Institute’s US-based financial reporting policy
group, said US investors have traditionally resoundingly supported
full fair value.
Peters said that in a soon-to-be-published
member survey, 40 percent of respondents said full fair value was
the way to go, about 30 percent said they would settle for a mixed
measurement model and about 20 percent supported amortised
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However, Herz said the FASB is exploring a
model that would reflect both points of view.
“On the one hand, by continuing to reflect a
‘business model’ approach to what gets reported in earnings, it
preserves most of the current aspects of reporting net income and
earnings per share,” Herz said.
“On the other hand, by presenting both fair
value information and amortised cost information on the face of
financial statements for instruments that are being held for
collection or payment of cash flows, it could enable investors to
more easily incorporate either or both in their