Project Update

Accounting for Financial Instruments—Classification and Measurement—Joint Project of the FASB and IASB

Last updated on March 14, 2014. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

This project update summarizes the project activities and decisions of the IASB and the FASB (Boards). It was prepared by the staff and is for the information and convenience of their constituents. All decisions of the Boards are tentative, may change at future Board meetings, and do not change current accounting and reporting requirements. Decisions of the Boards become final only after extensive due process. Please refer to the main Accounting for Financial Instruments project page for additional information related to all aspects of the Accounting for Financial Instruments project.

Due Process Documents
IASB Due Process Documents
*Decisions Reached at the Last Meeting
*Summary of Decisions Reached to Date
*Board/Other Public Meeting Dates—Current
Project Plan
Contact Information

Due Process Documents

On April 12, 2013, the Board issued a proposed Accounting Standards Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities—Proposed Amendments to the FASB Accounting Standards Codification®. The comment period ended on May 15, 2013. This proposed Update contains consequential amendments to the various FASB Accounting Standards Codification Topics that will be impacted by the proposed Accounting Standards Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which was issued on February 14, 2013.
On February 14, 2013, the Board issued a proposed Accounting Standards Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The comment period ended on May 15, 2013. This proposed Update contains the proposed classification and measurement guidance.
On May 26, 2010, the Board issued a proposed Accounting Standards Update, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities (May 2010 proposed Update). The comment period ended on September 30, 2010. The May 2010 proposed Update contains proposed classification and measurement guidance.

IASB Due Process Documents 

On November 28, 2012, the IASB issued an Exposure Draft, Classification and Measurement: Limited Amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010)). The comment period ended on March 28, 2013. A summary of the feedback received is available on the IASB website.

Classification and Measurement: Limited Amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010))

The IASB completed its first phase of classification and measurement of financial instruments with the issuance of IFRS 9 Financial Instruments. On November 12, 2009, IFRS 9 was issued containing requirements for classifying and measuring financial assets. On October 28, 2010, the IASB added the requirements for classifying and measuring financial liabilities to IFRS 9.

IFRS 9 Financial Instruments

*Decisions Reached at the Last Meeting


March 12, 2014

The Board continued redeliberating the proposed Accounting Standards Update, Financial Instruments—Overall, (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, deciding to retain the separate models in existing U.S. GAAP for determining classification of loans and securities.

The Board directed the staff to analyze the current U.S. GAAP definition of a security to determine whether changes are needed to more clearly distinguish the instruments to be evaluated using the securities classification model.

*Summary of Decisions Reached to Date (as of March 14, 2014)

See minutes below.

*Board/Other Public Meeting Dates—Current

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

*March 12, 2014 Board Meeting—The Board continued redeliberations of its February 2013 Exposure Draft, specifically to discuss the business model assessment for classifying financial assets.
February 26, 2014 Board Meeting—The Board continued redeliberations of its February 2013 Exposure Draft, specifically to discuss the potential need for a new contractual cash flow characteristics assessment, and separately, discuss a potential fair value option for hybrid financial assets.
January 29, 2014 Board Meeting—The Board continued redeliberations of its February 2013 Exposure Draft, specifically to discuss the business model assessment.
December 18, 2013 Board Meeting—The Board continued redeliberations of its February 2013 Exposure Draft, specifically to discuss the complexity of the proposed contractual cash flow characteristics test (as clarified by the Board at its September 18, 2013 Joint FASB and IASB Board Meeting).
November 20, 2013 Joint Board Meeting—Joint redeliberations of the February 2013 Exposure Draft on Accounting for Financial Instruments- Classification and Measurement. Specifically, the Boards discussed with discussion on the overall business model assessment and the distinctions between business model categories.
September 18, 2013 Joint Board Meeting—Joint redeliberations of the February 2013 Exposure Draft on Accounting for Financial Instruments- Classification and Measurement. Specifically, the Boards discussed the previously raised issues surrounding the cash flow characteristics test and made tentative decisions to clarify the SPPI condition
July 23, 2013 Joint Board Meeting—Joint FASB/IASB discussion on the plan for upcoming joint redeliberation on Classification and Measurement.
June 18, 2013 Board Meeting—Joint FASB/IASB discussion of feedback received from users of financial statements on the IASB’s Exposure Draft and the comment letter and outreach summary of the FASB’s February 2013 Exposure Draft and April 2013 Exposure Draft. The meeting was informational, and no decisions were reached.
May 24, 2013 Board Meeting—Joint FASB/IASB discussion of the comment letter and outreach summary of the IASB’s November 2012 Exposure Draft, Classification and Measurement: Limited Amendments to IFRS 9. The meeting was informational, and no decisions were reached.
January 9, 2013 Board Meeting—Decisions about the measurement of other investments held by not-for-profit entities and whether to extend the practicability exception for equity securities without a readily determinable fair value to investments in ownership interests in an entity that are not equity securities.
December 12, 2012 Board Meeting—Decisions about whether to proceed with drafting a proposed Accounting Standards Update for vote by written ballot and the comment period for the proposed Accounting Standards Update.
October 31, 2012 Board Meeting—Decisions about the transition requirements of the tentative model for the classification and measurement of financial instruments.
October 19, 2012 Board Meeting—Decisions about the scope of the classification and measurement model for financial instruments.
October 17, 2012 Board Meeting—Decisions about disclosures related to core deposits, instruments measured at redemption value, and application of the cash flow characteristics test to beneficial interests in securitized financial assets.
October 3, 2012 Board Meeting—Decisions about the assessment of a valuation allowance against a deferred tax asset, disclosures, and scope considerations related to specialized industries.
September 5, 2012 Board Meeting—Decisions about acceleration of the Board’s tentative decision related to presentation of changes in own credit in other comprehensive income for financial liabilities for which a fair value option has been elected and the measurement of foreign currency gains and losses for foreign-currency-denominated debt securities classified and measured at FVOCI.
August 29, 2012 Board Meeting—Decisions about application guidance related to the business model assessment for the classification and measurement of financial assets at amortized cost, FVOCI and FVNI.
August 9, 2012 Board Meeting—Decision about requiring nonpublic entities to present parenthetically or disclose fair value amounts for financial assets and financial liabilities measured at amortized cost.
August 1, 2012 Board Meeting—Decisions about the recognition of a valuation allowance for deferred tax assets related to debt instruments measured at FVOCI, recognition and measurement of foreign currency gains and losses on foreign-currency-denominated debt instruments classified at FVOCI, and presentation of debt instruments initially measured at amortized cost that are subsequently identified for sale.
July 18, 2012 Joint Board Meeting—Decisions about how an entity would account for the change in the classification of financial assets arising from a change in its business model.
June 20, 2012 Board Meeting—Decisions about changes in the fair value due to own credit risk of financial liabilities designated under the fair value option and the nonmarketable equity securities practicability exception for public entities.
June 13, 2012 Joint Board Meeting—Decisions about the business model assessment for classification of financial assets at FV-OCI and FV-NI, including reclassification of financial assets recognized at amortized cost, FV-OCI, and FV-NI.
May 21, 2012 Joint Board Meeting—Decisions about the business model assessment for classification of financial assets at FV-OCI and FV-NI, including reclassification of financial assets recognized at amortized cost, FV-OCI, and FV-NI.
April 17, 2012 Joint Board Meeting—Decisions about the business model assessment for classifying financial assets at amortized cost and bifurcation of financial assets and financial liabilities
February 28, 2012 Joint Board Meeting—Decisions about the contractual cash flow characteristics assessment for financial assets
February 28, 2012 Joint Education Session—Discussions about the business strategy criterion regarding the classification and measurement of financial assets under IFRS 9 and the FASB’s tentative model. Click here for the slides used in the education session.
January 27, 2012 Joint Board Meeting—Decisions about joint efforts to reduce key differences between IFRS 9 and the FASB’s tentative classification and measurement model
September 7, 2011 Board Meeting—Decisions about the fair value option for financial assets and financial liabilities
August 10, 2011 Board Meeting—Decisions about the financial statement presentation of financial instruments, the equity method of accounting, and financial statement presentation of changes in fair value attributable to changes in an entity’s “own credit”
June 22, 2011 Board Meeting—Decisions about the accounting for loan commitments
June 14, 2011 Joint Board Meeting—Informational session to provide a summary of tentative decisions reached by the FASB on classification and measurement of financial instruments.
June 8, 2011 Board Meeting—Decisions about the initial measurement of financial instruments and the fair value option for financial instruments
May 31, 2011 Board Meeting—Decisions about the classification and measurement of financial liabilities
May 26, 2011 Board Meeting—Decisions about the practicability exception for nonmarketable equity securities and the equity method of accounting
May 4, 2011 Board Meeting—Decisions about the characteristics of the instrument criterion for classifying and measuring financial instruments.
April 20, 2011 Board Meeting—Decisions about classification and measurement relating to subsequent sales of debt instruments classified as amortized cost.
April 6, 2011 Board Meeting—Decisions about refinements to the business strategy criterion for classification and measurement and bifurcation of embedded derivative features in hybrid financial instruments.
March 2, 2011 Board Meeting—Decisions about the classification and measurement of certain equity securities and financial liabilities
January 25, 2011 Board Meeting—Decisions about the business strategy criterion for classifying and measuring financial assets, reclassifications between categories of financial assets, tainting of the amortized cost category due to subsequent sales, and recognition of realized gains and losses for financial assets measured at fair value with qualifying changes in fair value recognized in other comprehensive income

Project Plan

On May 26, 2010, the Board issued a proposed Accounting Standards Update, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities. The comment period ended on September 30, 2010. Please refer to the Due Process Documents section of this page for a link to the proposed Update.

The FASB performed extensive outreach to obtain feedback from constituents, including investors, preparers, auditors, regulators and others, and received over 2,800 comment letters on the May 2010 proposed Update. The Board considered the constituent feedback received in its redeliberations of the May 2010 proposed Update.

The FASB began redeliberations on its proposed classification and measurement model in December 2010. In January 2012, the FASB and the IASB decided to jointly redeliberate select aspects of the FASB’s tentative classification and measurement model and the classification and measurement guidance in IFRS 9 to reduce key differences between their respective models. The Boards tentatively decided to discuss the following key differences:
  1. The contractual cash flow characteristics of a financial instrument
  2. The need and basis for bifurcation of financial instruments
  3. The basis for and scope of a possible third classification category (debt instruments measured at fair value through other comprehensive income)
  4. Any interrelated issues from the above (for example, disclosures or the model for financial liabilities given the financial asset decisions).
The FASB concluded its redeliberations in January 2013 and issued a revised exposure draft in February 2013. The FASB also issued in April 2013 a separate exposure document that includes consequential amendments to the various FASB Accounting Standards Codification Topics that are impacted by the February 2013 proposed Accounting Standards Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The FASB will consider the comments received on its proposals, as well as the comments received by the IASB on its proposal, which was issued in November 2012, prior to finalizing the standard.

On November 12, 2009, the IASB issued IFRS 9, Financial Instruments, which provides guidance on classification and measurement of financial assets. On October 28, 2010, the IASB added to IFRS 9 the requirements for classification and measurement of financial liabilities. Most of the requirements for financial liabilities were carried forward unchanged from IAS 39, Financial Instruments: Recognition and Measurement. However, some changes were made to the fair value option for financial liabilities to address the issue of own credit risk. At the July 22, 2011 meeting, the IASB tentatively decided that the mandatory effective date of IFRS 9 should be changed to annual periods beginning on or after January 2015. In addition, the IASB decided that early application of IFRS 9 should continue to be permitted. On November 7, 2011, the IASB decided to extend the effective date of IFRS 9 to annual periods beginning on or after 1 January 2015. Early application of IFRS continues to be permitted. On November 11, 2011, the IASB decided to make limited modifications to IFRS 9, and decided to jointly deliberate selected select aspects of the classification and measurement guidance in IFRS 9 to reduce key differences. On November 28, 2012, the IASB issued its Exposure Draft, Classification and Measurement: Limited Amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010)).

Click here to access the IASB's financial instruments project website for more information about the IASB project plan, the expected timing of exposure drafts and final standards, and a summary of the IASB's decisions reached to date.

Contact Information

Rahul Gupta
Project Manager
rgupta@fasb.org

Nick Milone
Practice Fellow
nkmilone@fasb.org

Alex Debbink
Postgraduate Technical Assistant
amdebbink@fasb.org

David M. Shaw
XBRL Assistant Project Manager
dmshaw@fasb.org

Anna Rose
XBRL Project Research Associate
arose@fasb.org