Derecognition: IASBs Proposed Amendments to IAS 39
By Alberto Del Din and Norman Pepe
The G20 and the Financial Stability Forum have expressed concerns about a number of accounting issues that have emerged from the current financial crisis and market turmoil, and have urged sound reform of the international accounting principles.
In response, the International Accounting Standards Board (IASB) has undertaken a wide range of activities, including a significant acceleration of the revision process on the derecognition requirements and the related derecognition disclosure requirements.
In March 2009 the IASBs efforts resulted in the publication on its website of an exposure draft on derecognition (the Exposure Draft or ED), with an invitation to comment addressed to the public (auditors, trade associations, regulators, other users of financial statements, etc.). The comment deadline expired on 31 July 2009. An IASB meeting is scheduled to be held this month to discuss possible ways forward.
The purpose of this Client Alert is to (i) briefly summarize the amendments proposed in the Exposure Draft regarding the IAS 39 and (ii) conduct a preliminary analysis on the impact that they may have, if implemented, on strategies and techniques available to banks to derecognize their portfolios of loans through their disposal in the context of securitization transactions.