EBA欧洲银行-2010-09-30-28CEBS-response-FASB-ED-Financial-Instruments29_8页_174kb

FASB Exposure Draft Summary: Accounting for Financial Instruments and Revisions to Derivative Instruments and Hedging Activities

Core Content

The Financial Accounting Standards Board (FASB) has issued an exposure draft (ED) proposing changes to the accounting for financial instruments and derivative instruments and hedging activities. The Committee of European Banking Supervisors (CEBS), representing European banking supervisory authorities and central banks, has provided detailed comments on the draft, emphasizing the need for convergence between IFRS and US GAAP.

Main Views and Key Comments

1. Measurement Model for Financial Instruments

• CEBS supports a mixed attribute measurement model, which allows entities to reflect their business model in financial reporting.
• Opposes the FASB's (almost) full fair value model, as it may not align with the business models of most banks and could reduce comparability.
• Notes the G20 and Financial Stability Board's mandate to avoid expanding the scope of fair value measurement.
• Points out that the FASB's model is not consistent with the IASB's approach, which requires amortised cost for certain instruments and is more aligned with the business model of banks.

2. Presentation of Amortised Cost Information

• CEBS is concerned about presenting both fair value and amortised cost on the face of the balance sheet, as it could lead to confusion for users.
• Supports the disclosure of fair value information in the notes, as it is consistent with current IFRS and US GAAP.
• Believes that the FASB's approach could reduce the effectiveness of achieving comparability between IFRS and US GAAP.

3. Impairment Model

• CEBS finds the FASB's impairment model unclear, particularly regarding the interaction between individual and collective impairment.
• Considers the FASB model to be an incurred loss model with earlier provisioning than current US GAAP.
• Supports the IASB's Expected Cash Flow model, which allows for more comprehensive credit risk assessment.
• Argues that the FASB's model does not permit forecasting future cash flows, which limits its usefulness.

4. Embedded Derivatives

• Recognizes that the FASB's fair value model reduces the need for bifurcation of hybrid financial instruments.
• Believes that bifurcation remains necessary in a mixed attribute model, especially for financial liabilities.
• Emphasizes that amortised cost is more appropriate for straightforward host contracts, as it better reflects the business model.

5. Own Credit Risk

• CEBS is skeptical about the FASB's approach to own credit risk, which only considers changes specific to the entity.
• Argues that the IASB's broader definition of own credit risk is more appropriate, as it includes changes in market prices of credit.
• Calls for convergence on how own credit risk is accounted for, as the current divergence could affect the reliability and comparability of financial statements.

6. Demand Liabilities

• CEBS believes demand deposits should be measured at the amount contractually owed, not at fair value.
• Critiques the FASB's proposed measurement for core deposits, which involves complex calculations and could be misleading.
• Notes that this approach is inconsistent with IFRS, where amortised cost is the standard for financial liabilities.

7. Hedge Accounting

• CEBS views hedge accounting as essential in a mixed attribute model, where mismatches in measurement bases are more common.
• Supports the FASB's move toward a principles-based approach, but emphasizes the need for adequate documentation and immediate recognition of ineffectiveness.
• Believes that hedge accounting should only be discontinued if the criteria are no longer met or the instrument is no longer relevant.
• Agrees that hedge accounting should be applied to individual risks, not just the full fair value of an instrument.

8. Recycling of Other Comprehensive Income (OCI)

• CEBS supports the recycling of OCI elements to profit or loss when they become realised, as this is consistent with current practice.

Conclusion

CEBS encourages the FASB to collaborate with the IASB to develop a single mixed attribute measurement model for financial instruments. This would eliminate the need for reconciliation between IFRS and US GAAP and improve the relevance, reliability, and comparability of financial statements. While acknowledging some positive aspects of the FASB's proposals, CEBS remains cautious about the full fair value model and its potential to undermine the integrity of financial reporting for banks.