At its meeting today the Accounting Standards Board (ASB) agreed to issue amendments to FRS 26 (IAS 39) ‘Financial Instruments: Recognition and Measurement’ and FRS 29 (IFRS 7) ‘Financial Instruments: Disclosures’. These amendments would clarify the effective date and transition requirements of the amendment to those two standards issued by the ASB on 24 October 2008 ‘Reclassification of Financial Assets’ permitting the reclassification of certain financial instruments.

The ASB amendments arise as a consequence of the clarification amendments published by the International Accounting Standards Board (IASB) on 1 December 2008 to the wording of the original 13 October 2008 amendment to IAS 39 ‘Financial Instruments: Recognition and Measurement’ and IFRS 7 ‘Financial Instruments: Disclosures’. This updated version of the ‘Reclassification of Financial Assets’ amendment to IAS 39 and IFRS 7 clarified the effective date and transition arrangements.

In moving to issue the amendments, the ASB – like the IASB – will be issuing them in final form. The ASB wants to ensure that FRS 26 and FRS 29 remain converged with IAS 39 and IFRS 7 and its view is that the amendments do not alter the effect of the standards but remove a potential ambiguity in the effective date.

The ASB is mindful of other related changes to IAS 39 that are currently being considered by the IASB. Therefore, it intends to hold back the above amendments to FRS 26 until the beginning of 2009 when it has given due consideration to the further changes that may be required.

1. The amendments make clear that any reclassification made on or after 1 November 2008 take effect from the date of reclassification. However, any reclassification before 1 November 2008 can take effect from 1 July 2008 or a subsequent date. A reclassification cannot be applied retrospectively before 1 July 2008.
2. The ASB is an operating body of the Financial Reporting Council (FRC), the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the FRC Board. The Committee on Corporate Governance assists the Board in its work on corporate governance.
3. The main role of the ASB is to contribute to the establishment and improvement of standards for financial reporting. The ASB collaborates with accounting standard-setters from other countries and the International Accounting Standards Board (IASB) both in order to influence the development of international standards and in order to ensure that its standards are developed with due regard to international developments.
4. The ASB has eleven Board members, of whom two (the Chairman and the Technical Director) are full-time, and the remainder, who represent a variety of backgrounds, are part-time. The IASB amendments can be obtained from the IASCF Publications Department – e-mail: publications@iasb.org.  Website: www.iasb.org .
5. Press enquiries should be addressed to Ian Mackintosh (Chairman) on 020 7492 2434, David Loweth (Technical Director) on 020 7492 2420 or Seema Jamil-O’Neill (Project Director) 020 7492 2422.