(EFRAG draft comment letter Financial Instruments Complexi 205)

23 July 2008 International Accounting Standards Board 30 Cannon Street London EC4M 6XH UK DRAFT COMMENT LETTER Comments should be sent to Commentletter@efrag.org or uploaded via our website www.efrag.org by 18 September 2008 Dear Sir/Madam, Discussion Paper Reducing Complexity in Reporting Financial Instruments On behalf of the European Financial Reporting Advisory Group (EFRAG), I am writing to comment on the IASB Discussion Paper Reducing Complexity in Reporting Financial Instruments (the DP). This letter is submitted in EFRAG’s capacity of contributing to the IASB’s due process and does not necessarily indicate the conclusions that would be reached in its capacity of advising the European Commission on endorsement of the definitive IFRS. To summarise, the DP argues that existing accounting requirements for financial instruments are too complex and need to be simplified. It identifies two areas—measurement and hedge accounting—as areas that seem to be significant causes of that complexity, and it argues that one of the main ways to simplify the requirements is to reduce the number of different ways of measuring financial instruments. From that it concludes that the long-term objective should be to measure all financial instruments in the same way. The DP concludes that that should be by measuring them all at fair value (so-called ‘full fair value’). However, there are a number of issues that need to be resolved before that ...