There is diversity in accounting for related party financial instruments. There are also concerns regarding the usefulness of some financial statement disclosures related to financial instruments.
Based on feedback received from respondents to its Post-implementation Review: Section 3856, Financial Instruments, the Accounting Standards Board (AcSB) understands that the guidance pertaining to the following areas are not clear and the lack of clarity leads to diversity in practice:
- scope of accounting for related party financial instruments after initial recognition; and
- measurement of related party compound financial instruments.
We also understand that disclosures about risks related to financial instruments are not entity-specific and therefore not useful.
Issues to be considered during this project include:
- clarifying the scope of related party financial instruments;
- clarifying the measurement of related party compound financial instruments; and
- amending the financial instrument risk disclosure requirements.