IASB to improve derecognition requirements ...

The International Accounting Standards Board (IASB) has published a draft proposal aimed at improving the derecognition requirements for financial instruments. Read original article.

Derecognition occurs when an entity needs to remove an instrument from its financial statements.

The IASB is also proposing to enhance disclosure requirements in situations where a firm still has an ongoing involvement with an asset that has been removed from its statements in such a manner.

Sir David Tweedie, chairman of the IASB, explained that the use of special structures by banks to manage complex securitisation arrangements had brought this matter to the fore.

He said: "Financial structures have become increasingly complex and sophisticated, creating the need for improved ways of assessing whether an entity should derecognise assets or not."

The crisis also underlined the need for users of financial statements to have access to better information about off balance sheet risks, he added.

Recently, the IASB updated its fair value standards to bring them more closely into line with their US equivalents.