The IASB added this project to its agenda for the following reasons:

• to improve the derecognition requirements for financial assets in IAS 39, which have been perceived to be complex to understand and apply in practice
• to provide users with more information about an entity’s exposure to the risks of transferred financial assets
• to facilitate convergence between the derecognition requirements in IAS 39 and those in US GAAP

In March 2009, the Board published an exposure draft (ED)  Derecognition - Proposed amendments to IAS 39 and IFRS 7. Read the ED and related press release.

In June 2009, the Board held public round-tables to discuss the proposals in the ED in North America, Asia and Europe. Click herefor further information. In addition to the round-tables, the IASB staff also undertook an extensive outreach programme with users, preparers, regulators, auditors, trade associations, and others. The comment deadline for the ED closed in July 2009.

In Q1 2010, the IASB developed more fully the alternative model described in the ED. The IASB and the FASB discussed that model during several joint meetings.

In May 2010, the boards reconsidered their strategies and plans for derecognition in light of:

• their joint discussions of the alternative derecognition model developed by the IASB
• the recent FASB amendments that reduce the differences between IFRSs and US GAAP
• the guidance the IASB received from National Standards-Setters on the largely favourable effects of the IFRS derecognition requirements during the financial crisis

The boards agreed that their near-term priority should be on increasing the transparency and comparability of their standards by improving and converging US GAAP and IFRS disclosure requirements for financial assets transferred to another entity. The boards also decided to conduct additional research and analysis, including a post-implementation review of the FASB’s recently amended requirements, as a basis for assessing the nature and direction of any further efforts to improve or converge IFRSs and US GAAP.

As a result of the above, the IASB plans to finalise the disclosure requirements that were included in the exposure draft Derecognition - Proposed amendments to IAS 39 and IFRS 7 with the view of converging the disclosure requirements in IFRS to the US GAAP requirements for transfers of financial assets. The target date for publication of the final standard is Q3 2010.

In 2012, the FASB will also conclude its post-implementation review of the application of its amended derecognition requirements. The boards will make a decision about the nature and scope of any further improvement and convergence efforts at that point.