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Comments from the Association of Chartered Certified Accountants
June 2001

SUMMARY OF ACCA'S VIEWS

The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to respond to the above consultation paper prepared by the Joint Working Group (JWG) of standard setters in the form of a draft standard and issued for comment by the Accounting Standards Board (ASB) and International Accounting Standards Committee, now the International Accounting Standards Board (IASB).

Financial instruments are very widely defined and comprise most monetary assets and liabilities. They include all debtors, investments, cash, creditors and borrowings. ACCA notes that the main impetus for the development of this standard was to improve the accounting for a narrower group of items - derivatives, money market instruments and investments.

This draft standard proposes a radically new accounting model for these items to be stated at a current value with all changes reflected in the results for the period. The proposals will, however, affect the whole range of financial instruments, including items where the existing historical cost model is perceived to be working reasonably well. In order for the proposals to be acceptable a wider range of measures of current values will be needed than simply the narrowly defined fair value in this draft standard.

ACCA's views differ on some of the other key issues raised as follows.

(1) Including all fair value changes in profit for the year would not be right - there needs to be some separation of operating and non-operating gains and losses.

(2) These proposals are not appropriate to be imposed on smaller entities.

(3) The rules on when assets and liabilities should be on or off balance sheets (recognition and derecognition) should be simplified.

(4) Guidance on how to value trade debtors and creditors needs to be supplied.

ACCA supports, however, the draft standard in:

• applying current values to a company's own debt
  
  
• using the fair value model for interest cost or income
  
  and
  
  
• ending hedge accounting.

PRINCIPAL COMMENTS

Like the International Accounting Standards (IAS) 32 and 39, this draft standard defines financial instruments very broadly, in effect most monetary assets and liabilities.

The draft standard prepared by the JWG is proposing radically different accounting treatments for many financial instruments from those commonly used at present. The impetus for this project came from the need to ensure that the accounting for derivatives and other money market instruments was appropriate to the changing commercial conditions. The new accounting model needs to focus particularly on these items. We are uneasy with the wide definition of financial instruments which would apply those radically different accounting treatments to a whole host of other items (e.g. trade debtors, amounts recoverable under long term contracts, trade creditors, or an entity's own liabilities) for which the existing accounting model, of the lower of cost and net realisable value, is perceived to be working satisfactorily.

This problem could be addressed in a number of ways.

• The definition of financial instrument could in some way be narrowed down to those items where a new accounting model was essential.
  
  
• Certain financial instruments could be stated using the historical cost model (which is the approach of IAS39).
  
  
• The definition of current value could be widened so that all items can be valued appropriately.

Any of the above options would be workable in our view. It is the third approach, however, that we have supported in making this response. We have accepted the wide definition and the requirement to state financial instruments at their current value rather than historical cost. The valuation, however, of all financial instruments at fair value (based on market exit prices) would not be right. Particularly with trade debtors and creditors and some other items noted above, a replacement cost (market entry prices) or value in use would be more appropriate.

ACCA RESPONSES TO JWG'S SPECIFIC QUESTIONS

Scope and Definitions

Q1. The Draft Standard would apply to all enterprises. Do you agree? If not, please specify which enterprises you believe should be excluded from the scope (and why), and the basis on which you would distinguish those enterprises that should apply the Draft Standard from those that need or should not.

We agree that there seem no grounds for excluding specific industry sectors from this standard (e.g. banks or insurers).

In the case of smaller enterprises, ASB should exclude these proposals from the FRSSE, in the first instance. The benefits of comparability with larger entities and the superior accounting treatment, seem unlikely to outweigh the costs for small companies of change-over and of the more complex and unfamiliar accounting system. For IASB this draft standard appears to be a good case in point of why a general review is needed of whether their standards are suitable to apply without modification to enterprises where there is no public investor interest.

Q2. The definition of a financial instrument would differ somewhat from the present IASC definition. Do you agree with the definition in the Draft Standard? If not, what changes would you make, and why?

We agree with the new definition, with the exception that we do not necessarily see why financial instruments should be restricted to contractual arrangements. Contracts could have a very specific legal meaning in some countries, and might not have a direct equivalent in certain other jurisdictions. We think that the key element required is that financial instruments consist of legally enforceable rights.

In certain respects we think the new definition is better than that in IAS32 or FRS13 for example. One of our concerns previously was that a wide range of executory contracts (for example non-cancellable unfulfilled sales and purchase orders), and leases might be included inappropriately. This was because such cases gave rise in part to financial assets and liabilities. The new requirement that the sole consideration is the release from the liability generally appears to exclude such arrangements.

As we have noted above, however, the definition remains very widely drawn even in its new form.

Q3. The Draft Standard would apply to all financial instruments except for those referred to in paragraph 1.

(a) Do you agree with the proposed scope exclusions and the manner in which they are defined? If not, why not?

(b) Are there other items that should be excluded from the scope of the Draft Standard? If so, why, and how should those items be defined?

We agree with the proposed scope exclusions and would add no further items. In terms of the clarity of the definition, paragraph1(g) might need to be reconsidered. It would appear to include leases as well as royalties and licence fees for example, and it did not seem to be the intention that all leases should be excluded from the scope of the draft standard.

Q4. The definition of an insurance contract used in the IASC Insurance Steering Committee's, Issues Paper: Insurance, November 1999, is used as the basis to exclude insurance contracts from the scope of the Draft Standard. However, financial guarantees and certain contracts that require payment based on the occurrence of uncertain future climatic, geological or other physical events would not be excluded? Do you agree with this approach and definition? If not, what approach and definition would you propose?

We agree with the approach to use the same definition of an insurance contracts in the two projects.

Q5. The scope of the Draft Standard would include certain additional items, including certain contracts to buy or sell a non-financial item and servicing assets and servicing liabilities. Do you agree that these additional items should be included in the scope? If not, why not?

(a) Are the additional items included defined in a manner that can be clearly applied? If not, how would you amend the requirements?

(b) Are there other items that should be included in the scope of the Draft Standard and, if there are, how should they be defined?

We have no problem with these additional items being included within the draft standard. Servicing rights and obligations (and the resulting assets and liabilities), however, relate to collecting repayments on portfolios of loans or the payment of interest on debt for instance. These are, therefore, financial instruments anyway as they appear to involve the right to pay or receive amounts of money.

We would not include any further additional items.

Q6. The Draft Standard would require an enterprise, with certain exceptions, to separately account for sets of contractual rights and contractual obligations in a hybrid contract that, if they were separated, would fall within the scope of the Draft Standard. Do you agree with this proposal? Is the definition of a hybrid contract clear and operational? If you disagree with either of these two questions, what alternative would you suggest?

We agree in principle with the treatment of hybrid contracts. We observe, however, that the introduction of the concept of hybrid contracts makes the standard more complicated and harder to understand. It might help, in this context, to have some examples of the concerns that are meant to be addressed by this provision.

There must also be a risk that this principle may give rise to uncertainty and subjectivity, as many contracts could be argued to be hybrids and contain an element of a financial instrument. Paragraph 2.62 on page 178, for instance, includes an example where a separate commitment is not intended to be recognised. It seems possible, however, that this case could be argued to be a hybrid contract.

Recognition and Derecognition

Q7. The basic recognition principle is that an enterprise should recognise a financial asset or financial liability on its balance sheet when, and only when, it has contractual rights or contractual obligations under a financial instrument that result in an asset or liability. Do you agree? If not, why not? How would you amend the principle?

We agree with the principle, with the exception of the wording referring exclusively to contracts as noted in our answer to Q2 above.

Q8. The Draft Standard would require that a transfer that does not have substance not affect the assets and liabilities recognised. It proposes that a transfer has substance only if either the transferee conducts substantial business, other than being a transferee of financial assets, with parties other than the transferor, or the components transferred have been isolated from the transferor. Do you agree? If not, how would you propose to limit the potential for non-substantive transactions that might occur without such a test?

We do not think that the test of the substance of a transfer for recognition of financial instruments is needed, and so paragraphs 35 and 36 should be reconsidered. From the point of view of the transferee if there are assets or liabilities under paragraph 31 then they should be recognised. From the transferor's point of view a transfer without substance should be adequately covered by the derecognition provisions.

In addition paragraph 36(a) seems wrong and perhaps inconsistent with other standards. The range and volume of the counterparty's other transactions should not in principle affect the treatment of the transaction in question. Entities may be established to carry out a single transaction. We prefer the approach of SIC12 and FRS5 which would be to consolidate a special purpose entity (SPE) where an interest amounted to control, rather than not recognising the transaction with the SPE at all. Paragraph 36(b) may not be consistent with paragraph 45(b) with regard to the effects of bankruptcy.

Q9. The basic derecognition principle is that an enterprise should derecognise a financial asset or financial liability or a component thereof when, and only when, it no longer has the contractual rights or the contractual obligations that resulted in that asset, liability or component. Do you agree? If not, why not? How would you amend the principle?

We agree with the basic principle. See our comments on the contractual element in response to Q2 above.

Q10. The Draft Standard would require that, in certain circumstances, when cash flows are passed through one enterprise to another, the assumption of a contractual obligation to make payments that fully reflect the amount of the cash flows being received from another enterprise would qualify as a transfer of the contractual right to receive the cash flows.

(a) Do you agree? If not, why not? How would you amend the requirement?

(b) Is the requirement and implementation material workable? If not, what changes do you believe are necessary to make them workable?

As a general observation the elaboration of the basic principle of derecognition adds considerably to the complexity of the draft standard. Simplifications where possible would be desirable.

In our view there should be a distinction made between derecognition and the offsetting of assets and liabilities or a linked presentation as in FRS5. In the example of the passing through of cash flows some contractual rights continue and assets could be held back in some circumstances e.g. bankruptcy. These would be better shown as offsetting assets and liabilities and or in a linked presentation, than entirely derecognised.

A potential inconsistency over the effect of rights in bankruptcy between paragraphs 36 and 45 in this regard has been noted above.

Q11. The JWG has developed criteria to be used to determine whether a financial asset (or a component thereof) should be derecognised by the transferor when a transfer of substance involving a financial asset takes place. In particular, the Draft Standard would require the whole of the financial asset previously recognised by the transferor to be derecognised if either the transferor no longer has a continuing involvement in that asset or the transferee has the practical ability, which it can exercise unilaterally and without imposing additional restrictions, to transfer the whole of that asset to a third party.

(a) Do you agree? If not why not? How would you amend the requirement?

(b) The JWG has developed some material to determine whether the transferee has the practical ability described above. Is this material appropriate, clear and operational? If not, how would you amend it?

We agree with the basic principle. Paragraphs 51 to 54, however, seem to add very little to what is already in paragraph 37.

Q12. The Draft Standard also would require, in the case of a transfer that does not result in the transferee having the practical ability described in Q11, if the transferor is left with either (a) an obligation that could or will involve the repayment of consideration received or (b) a call option over a transferred component that the transferee does not have the practical ability to transfer to a third party, some or all of the transaction to be treated as a loan secured by the transferred component.

(a) Do you agree? If not, why not? How would you amend the requirement? In particular, if you believe that some transfers involving financial assets are loans secured by the transferred asset, how would you differentiate between those transfers and transfers that are, in effect, sales of the transferred asset? If you do not believe that some transfers involving financial assets are loans secured by the transferred asset, or do not believe that some transfers are sales of the transferred asset, please explain your reasoning.

(b) The Draft Standard would require the liability to be recognised in such circumstances to be measured initially at the maximum amount that might need to be repaid under the obligation or the amount of the consideration received in respect of the transferred component over which the transferor has the call option. To the extent that the obligation and call option overlap, only the larger of the two liabilities would be recognised. Do you agree with this approach to determining the amount of the liability? If not, how would you change the approach?

(c) The Draft Standard would require, in the case of transfers that the Draft Standard would require the transferor to treat in part or entirely as loans secured on the transferred asset, the transferee not to adopt accounting that is the mirror-image of the transferor's. Do you agree with this approach? If not, why not? How would you amend the Draft Standard?

We agree with the approaches in parts (a), (b) and (c) above. We accept that in relation to (c) there will not be symmetry between transferor and transferee, but that is inherent in the treatment of components of financial instruments in the conditions for recognition and for derecognition.

Q13. The Draft Standard would require the basic recognition and derecognition principles set out in paragraphs 31 and 37 to be applied to all transfers not falling within paragraphs 51-67. Do you agree with this proposal? If not, why not? How would you amend the Draft Standard?

We agree with the proposal.

Measurement

Q14. The Draft Standard would require an enterprise to measure all financial instruments at fair value when recognised initially and to re-measure them at fair value at each subsequent measurement date, with one exception. Do you agree? If not, what other approach would you suggest and why?

We have noted above our concern over the wide scope of items which would fall under the fair value provisions of this draft standard. In particular trade debtors and creditors, items intended to be held to maturity and an entity's own debt. These are all items where the existing historical cost based model is perceived generally to be working satisfactorily. We would accept their being included at current value only if there is a wider definition of that value than fair value based on market exit price. Otherwise we would prefer that they remain stated at historical cost. These are all items currently excluded from the fair value requirements of IAS39 for example.

A current value based on value to the business model in the ASB's Statement of principles for financial reporting would be helpful for some of these items. This model is already also incorporated into International Accounting Standards via IAS36 on impairment of assets. The market exit price for trade debtors for example (value obtainable from non-recourse factoring) would commonly be considerably lower than their value in use realised by the originator in the normal course of business. The difference would represent the superior knowledge of the originator and their continuing relationship with the debtor. These factors are likely to be more significant than the time value of money.

Q15. The Draft Standard would require the fair value of a financial instrument to be an estimate of its market exit price determined by interactions between unrelated enterprises that have the objective of achieving the maximum benefit or minimum sacrifice from the transaction. The JWG also proposes that any expected costs that would be incurred to exit a financial instrument at that market exit price should not be taken into account in arriving at fair value.

(a) Do you agree with the market exit price objective? If not, how would you amend it and why?

(b) Do you agree with the proposed treatment of direct costs to sell or obtain relief from a financial instrument? If not, how would you amend it?

We do not agree that market exit price should be the sole objective of the valuation of financial instruments, given the wide scope of items included within that definition. As noted in our answer to Q14 above there should be recognition that there are ways to access the value of some financial instruments other than by sale in the market, particularly value in use.

There will be important groups of financial instruments where there are no observable market prices, for example trade creditors. Setting market exit prices as the objective for valuation is pointless in those cases.

Market prices, however, should be the basis of valuation in many cases, for instance derivatives and investments with readily realisable market values. For such items we agree that exit prices, excluding the effect of direct selling costs, are right. To use net realisable values will tend to have the effect of recognising selling costs when there is no commitment to sell, and writing off both the direct costs of purchase and of sale in the year of purchase.

Q16. The Draft Standard would require an enterprise to measure a part of a hybrid contract that is to be separately accounted for as if it were a free-standing financial instrument, except if the enterprise determines that it cannot reliably identify and measure the separate sets of financial instrument rights and obligations in the hybrid contract. In the latter case the enterprise would account for the entire contract in the same manner as a financial instrument falling within the scope of the Draft Standard. Do you agree with this proposal? If not, what alternative would you suggest?

We agree with the proposal.

Q17. The Draft Standard sets out principles for estimating the fair value of financial instruments within a hierarchy. First, observable market exit prices for identical instruments are to be used if available. If such prices are not available, market exit prices for similar financial instruments are to be used with appropriate adjustment for differences. Finally, if the fair value of a financial instrument cannot be based on observable market prices, it should be estimated using a valuation technique that is consistent with accepted economic pricing methodologies. Do you agree with this hierarchy? If not, how would you amend the proposals, and why?

We agree with the hierarchy proposed as a logical model. Cases where there are genuinely no observable market values in the instruments or in similar instruments, must call into question the value of the information provided, both in terms of its reliability and its relevance. In these cases it seems value in use and replacement costs are likely to be more useful.

Q18. The Draft Standard addresses a number of circumstances requiring special consideration in using observed market prices to determine fair value.

(a) Do you agree with the Draft Standard's conclusions in these circumstances? Are there additional circumstances that should be addressed (please specify)?

(b) Is the conclusion that value that is not directly attributable to a financial instrument should not enter into the determination of the fair value of a financial instrument appropriate and operational, in particular as it applies to demand deposit and credit card relationships? If not, why not?

(c) Do you agree with the conclusion that, if an enterprise holds a large block of financial instruments and market exit prices are available only for individual instruments or small blocks, the available price should not be adjusted for the potential effect of selling the large block? If not, in what circumstances would you require adjustment, and how would you ensure consistency of the amount of adjustments that would be made?

(a) We agree with the general guidance given in the circumstances.

(b) The principle of separating out other sorts of value connected with a financial instrument is right. Its application, however, may extend beyond credit card balances and demand deposits to many cases where the financial instrument arises from a regular trading cycle and an ongoing commercial relationship.

(c) We agree with valuing large holdings using prices for small packets. There should, however, be disclosure of significant holdings of financial instruments above a suitable threshold where the valuation effects might start to be significant. For equities this might be where the holding exceeds 3% for example.

Q19. The Draft Standard would require an enterprise that cannot estimate fair value using observable market exit prices of identical or similar financial instruments to estimate fair value by using a valuation technique. The Application Supplement includes material explaining how valuation techniques would be used in a number of situations.

(a) Is this material clear and operational? If not, how would you modify it?

(b) Is this material sufficient, or do you believe that more detailed material is necessary? Please specify what additional material you believe to be necessary.

(c) Are there other significant circumstances (please specify) on which guidance should be provided?

(d) Is the proposed material consistent with market pricing practices? If not, how should it be modified?

A notable gap in this application material is anything dealing with the valuation of trade debtors and creditors. This should be provided given the importance of these financial instruments to many enterprises, and the lack of market prices or even visible markets in these items.

The application material should also cover the problems of countries where there may be exchange control or other restrictions on accessing the value of financial instruments.

Q20. The JWG believes that fair values are, generally, reliably determinable, at reasonable cost, for all financial instruments except certain investments in private equity instruments. Do you agree? If not, why not? If you believe that other items are not capable of reliable fair valuation, what are they, what factors cause their fair values not to be reliably determinable, and how should these items be measured?

We agree with the proposals in relation to unlisted equities. We have noted under Q17 above doubts over the relevance and reliability of fair values where these are not based on observed market prices.

Q21. The Draft Standard would require the reported value of an enterprise's financial liabilities to reflect the enterprise's own creditworthiness and changes in it.

(a) Do you agree? If not, why not? How do you propose that the effect of changes in the enterprise's own credit worthiness could be excluded without giving rise to the difficulties noted in Basis for Conclusions paragraph 4.59?

(b) Is the material in paragraph 370 of the Application Supplement, explaining how an enterprise can establish whether there has been a change in its own creditworthiness affecting its financial liabilities when there is no observable market exit price, appropriate and operational? If not, why not? How could it be improved?

We agree that changes in the value of liabilities derived from alterations in an enterprise's own creditworthiness should be reflected in their financial statements. The explanatory material on valuation seems adequate.

Q22. The Draft Standard would require an enterprise to establish appropriate policies and procedures for estimating fair value of financial instruments. Do you agree with this proposal? If not, how would you change it in a manner that provides reasonable assurance of reliable and consistent fair value estimates?

We agree with the proposal. There will in some cases be subjective choices between valuation methodologies and models. Consistency from one period to another, clear disclosure of the methods used and of any changes in them are all very important in those circumstances.

Balance Sheet Presentation

Q23. The Draft Standard would require that minimum categories of financial assets and financial liabilities be distinguished on the face of the balance sheet and in the notes to the financial statements. Do you agree with the categories proposed? Are the categories clear and useful? If not, how would you amend them and why?

We do not agree with insisting that the items in paragraph 131 are shown on the face of the balance sheet as opposed to being allowed in the notes to the accounts. We are otherwise content with the proposals.

Income Statement Presentation

Q24. The Draft Standard would require an enterprise to recognise all changes in the fair value of financial instruments, after adjustment for receipts and payments, in the income statement in the reporting periods in which they arise, with one exception. Do you agree? If not, how should such gains and losses be treated, and why?

We do not agree, and consider that the proposals of the JWG need further consideration. Fair value changes on trading items should go to the income statement. The gains/losses on an entity's own debt, however, should be treated in a comparable way to the revaluation of fixed assets and be reported in a statement of total recognised gains and losses (STRGL).

The reporting of financial performance is currently the subject of debate, but this would not change our overall view. In a single performance statement there should be separate sections dealing with operating and non-operating items. Division along similar lines would apply in that context, as it would between the income statement and STRGL in the current model of reporting financial performance.

Q25. The Draft Standard would require an enterprise to separately disclose the income statement effects of certain changes in fair value.

(a) Do you agree with the proposed disaggregation? If not, why not? What other basis of disaggregation would you propose to provide information about the components of changes in fair value of financial instruments?

(b) Do you believe that any other gains and losses arising on fair value measurement of financial assets and financial liabilities should be separately presented in the income statement or notes thereto? If so, which gains and losses, and why do you believe that they should be shown separately? On what basis should such gains and losses be distinguished?

We agree with the proposed disaggregation.

Q26. The Draft Standard would require that interest revenue and interest expense be determined on the fair value basis, using the current yield to maturity basis, except that an enterprise may use the current market expectations basis if the chief operating decision maker relies primarily on that basis for assessing the performance of its significant interest-bearing financial instruments and it is consistent with the enterprise's basis for managing interest rate risk (see Draft Standard paragraphs 139 and 140, Application Supplement paragraphs 382-390, and Basis for Conclusions paragraphs 6.46-6.77).

(a) Do you agree that interest income and expense should be separately presented?

(b) Do you agree with the proposed method of determination? If not, how would you propose that interest revenue and interest expense be determined in a fair value model?

(c) Is the guidance clear and operational? If not, what additional guidance is necessary?

We agree with the separate presentation of interest income and expense. We also agree that interest should be calculated on the fair value basis and not using the historical effective rate method. The choice in how to calculate interest on the fair value basis, should not be an open and arbitrary one between the current yield to maturity method or the market expectation method. The method used should reflect the actual way in which the treasury function is managed. The method chosen should be used consistently unless there is an overriding reason to change (paragraph 129 of the draft standard), and should be subject to suitable disclosures of the effects of changes.

Hedges

Q27. The Draft Standard would not permit any special accounting for financial instruments entered into as part of risk management activities. Do you agree? If not, why not? How would you address the issues raised in paragraphs 7.1-7.22 of the Basis for Conclusions?

We agree that if these proposals were implemented hedge accounting should not be allowed.

Disclosure

Q28. The Draft Standard would require disclosure of an enterprise's significant financial risks and of the enterprise's financial risk management objectives and policies. Do you agree that this information is necessary to provide the context for understanding and evaluating information about the enterprise's actual financial risks and performance of its financial instruments? If not, how would you change these disclosures?

We agree with the proposed disclosures.

Q29. The Draft Standard would require disclosures about financial instruments used to manage risks associated with transactions expected to occur in future reporting periods only when an enterprise separately discloses gains or losses on those financial instruments. Do you agree with this approach? If not, how would you change it?

We agree with the proposed approach

Q30. The Draft Standard encourages, but does not require, disclosures about the extent to which fair values of financial instruments and income and cash flows could change as a result of changes in underlying financial risk conditions. Do you agree that these disclosures should be encouraged? If not, why not, and what alternative would you propose?

We agree, but would go further and require these sorts of disclosure.

Q31. Do you agree with the other disclosures proposed? If not, how should the disclosures be amended, while maintaining a balance between the need to inform users about an enterprise's financial risk position and the concern of causing competitive harm to the enterprise or unnecessary burden for preparers?

We agree with the other disclosures proposed.

Implementation Recommendations

Q32. The JWG proposes that about two years is a suitable period of time between issuance of a final standard and the effective date to balance preparation time with the need for standards. Do you agree? Do you believe that certain enterprises need additional time to prepare for implementation? If so, please specify which enterprises and how they should be differentiated from those that apply a final standard initially. Also, please specify why these enterprises may need more time and the length of time that may be required.

Implementation of any new standard should not be covered by the common text of a draft standard but be a matter for the individual standard setters working in their own jurisdictions and based on the circumstances at the time.

Q33. Some suggest that a comprehensive fair value model for financial instruments should be first introduced in supplemental financial statements, presented in parallel with financial statements prepared in accordance with existing practices. Only after a period of time would such financial statements replace financial statements prepared in accordance with existing practices. Do you believe that supplemental financial statements should be introduced before replacing financial statements prepared in accordance with existing practices? If so, how would you overcome the disadvantages of such an approach, which are identified in Basis for Conclusions paragraph 9.6?

We would not favour restricting the effects of fair value accounting to note disclosures, given the importance of some of the information on the one hand, and the practical problems and the attendant costs in its preparation on the other.

Q34. The Draft Standard includes a number of transitional provisions to be taken into account in adopting it (see Draft Standard paragraphs 192-195 and Basis for Conclusions paragraphs 9.8-9.21). Do you agree with these provisions? If not, why not? How would you amend them?

As noted in our answer to Q32 above we consider implementation issues will have to be a matter for consideration by individual standard setters at the time of implementation.

Q35. What steps need to be taken to assist in implementing a comprehensive fair value model for financial instruments? Please comment on any significant legal or other obstacles to implementing a final standard based on this Draft Standard and on how they might be best addressed.

As noted in our answer to Q32 above we consider implementation issues will have to be a matter for consideration by individual standard setters at the time of implementation.

Q36. Are there other issues that must be resolved before the Draft Standard could be implemented? If so, what are they and what steps should be taken to resolve them?

As noted in our answer to Q32 above we consider implementation issues will have to be a matter for consideration by individual standard setters at the time of implementation.

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