NEWS RELEASE 12/16/11
IASB and FASB Issue Common Offsetting Disclosure
Requirements
London and Norwalk, CT, December 16, 2011—The
International Accounting Standards Board (IASB) and the Financial Accounting
Standards Board (FASB) today issued common disclosure requirements that are
intended to help investors and other financial statement users to better assess
the effect or potential effect of offsetting arrangements on a company's
financial position. The eligibility criteria for offsetting are different in
International Financial Reporting Standards (IFRSs) and U.S. Generally Accepted
Accounting Principles (US GAAP).
Offsetting, otherwise known as netting,
is the presentation of assets and liabilities as a single net amount in the
statement of financial position (balance sheet). Unlike IFRSs, US GAAP allows
companies the option to present net in their balance sheets derivatives that are
subject to a legally enforceable netting arrangement with the same party where
rights of set-off are only available in the event of default or bankruptcy.
To address these differences between IFRSs and US GAAP, in January 2011
the IASB and the FASB issued an exposure draft that proposed new criteria for
netting that were narrower than the current conditions currently in US GAAP.
However, in response to feedback from their respective stakeholders, the boards
decided to retain their existing offsetting models and instead issue new
disclosure requirements to allow investors to better compare financial
statements prepared in accordance with IFRSs or US GAAP.
The common
disclosure requirements also improve transparency in the reporting of how
companies mitigate credit risk, including disclosure of related collateral
pledged or received. Further information is included in a project summary and
feedback statement, also issued today.
Hans Hoogervorst, Chairman of the
IASB, said: "These disclosures will help investors to bridge differences in the
offsetting reporting requirements of IFRSs and US GAAP, while the additional
requirements will also provide better information on how companies mitigate
credit risk related to offsetting. That said, using disclosures to bridge
differences in offsetting requirements was plan "B" for both
boards."
Leslie F. Seidman, Chairman of the FASB, said "The expanded
disclosures are responsive to the feedback we received from investors, who
wanted to understand both the gross and the net amounts for items offset in
accordance with legally enforceable netting arrangements. We are also requiring
expanded information about the collateral pledged and held in these
arrangements."
Companies and other entities are required to apply the
amendments for annual reporting periods beginning on or after January 1, 2013,
and interim periods within those annual periods. The required disclosures should
be provided retrospectively.
An interactive webcast by the IASB on the
amendments will be held at 10:30 and again at 15:00 GMT on 19 December 2011. To
register, please click here.
More
information about the project including a project summary and feedback statement
and an IASB podcast introducing the amendments can be accessed via the IASB's
project website at: http://go.ifrs.org/offsetting.
Notes
to editors:
The IFRS requirements are set out in amendments to
Disclosures—Offsetting Financial Assets and Financial Liabilities
(Amendments to IFRS 7) and in Accounting Standards Update No. 2011-11,
Balance Sheet (Topic 210): Disclosures about Offsetting Assets and
Liabilities, for US GAAP. These requirements are effective for annual
periods beginning January 1, 2013, and interim periods within those annual
periods. Retrospective application will be required to maximise
comparability.
Press enquiries:
Christine Klimek, Media Relations
Financial Accounting
Foundation
Telephone: (203) 956-3459
Email: clklimek@f-a-f.org
Mark
Byatt, Director of Communications and External Affairs, IFRS
Foundation
Telephone: +44 (0)20 7246 6472
Email: mbyatt@ifrs.org
Sonja Lardeau, Communications Manager, IFRS Foundation
Telephone: +44
(0)20 7246 6463
Email: slardeau@ifrs.org
Technical enquiries:
Barbara Davidson,
Senior Technical Manager,
IASB
Telephone: +44 (0)20 7246 6907
Email:
bdavidson@ifrs.org
About
the FASB
Since 1973, the US Financial Accounting Standards
Board has been the designated organization in the private sector for
establishing standards of financial accounting and reporting. Those standards
govern the preparation of financial reports and are officially recognized as
authoritative by the Securities and Exchange Commission and the American
Institute of Certified Public Accountants. Such standards are essential to the
efficient functioning of the economy because investors, creditors, auditors and
others rely on credible, transparent and comparable financial information. For
more information about the FASB, visit its Website at www.fasb.org.
About
the IASB
The IASB was established in 2001 and is the
standard-setting body of the IFRS Foundation, an independent, private sector,
not-for-profit organisation. The IASB is committed to developing, in the public
interest, a single set of high quality global accounting standards that provide
high quality transparent and comparable information in general purpose financial
statements. In pursuit of this objective the IASB conducts extensive public
consultations and seeks the co-operation of international and national bodies
around the world. The IASB has 15 full-time members drawn from 11 countries and
a variety of professional backgrounds. By July 2012 the Board will be expanded
to 16 members. Board members are appointed by and accountable to the Trustees of
the IFRS Foundation, who are required to select the best available combination
of technical expertise and diversity of international business and market
experience. In their work the Trustees are accountable to a Monitoring Board of
public authorities. For more information visit www.ifrs.org.