Accounting Advocacy
31 July 2009
European Securitisation Forum (ESF) Response to IASB Exposure Draft 3 on Derecognition - Proposed amendments to IAS 39 and IFRS 7
The ESF Accounting Committee responded to IASB Exposure Draft 3 on Derecognition, which proposed changes to IAS 39 and IFRS 7. The ESF response highlights the impact of the “Proposed Approach” (which permits derecognition of a transferred asset if the transferor has surrendered control of the entire asset or of a proportionate share of the cash flows from that asset) and the “Alternative View” (under which the transferor derecognises the asset and then recognises all rights and obligations retained/obtained in the transfer) on a typical securitisation transaction. The ESF considered that the outcome of the Alternative View would better represent, compared to the Proposed Approach, the residual economic position and post-transfer risk exposure for originators/sellers in securitisation transactions. However, the ESF pointed out that the Alternative View as currently drafted might potentially raise application issues and therefore recommended that, if the IASB decides to replace the derecognition requirements in the current IAS 39, it re-exposes for comment a further draft fully developing the Alternative View.
20 March 2009
The ESF Accounting Committee and Commercial Mortgage Securities Association Europe response to IASB Exposure Draft 10 on Consolidated Financial Statements. The response stresses the importance of appropriate consolidation rules in a deleveraging environment and welcomes the IASB proposal to replace the consolidation models of IAS 27 and SIC12 with a single standard. While supportive of the proposal to base the new consolidation standard on an improved concept of control, the response highlights certain weaknesses in the proposed standard, accompanying guidance and illustrative examples which will require further development for the new standard to fulfill its purpose.
12 September 2008
European Securitisation Forum Response to CESR Draft Statement on Fair Value Measurement and Related Disclosures of Financial Instruments in Illiquid Markets
The ESF submitted a number of general comments relating to the need for the CESR Statement to be consistent in its objective and position vis-à-vis other work-streams in the measurement and disclosure area. We also respond specifically to each of the four questions raised in the consultation paper. Broadly, the ESF agrees with CESR that deteriorating liquidity conditions in certain markets have made it more difficult to measure the fair value of instruments in those markets and that this could lead to an inconsistent application of fair value measurement requirements. The ESF also recognises that the increased complexity and uncertainty surrounding fair value makes it all the more important that investors receive sufficient information on how instruments have been valued.
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