International Accounting
Standards Board
30, Cannon Street, London EC4M 6XH, United Kingdom
№ 18-2-2-14/1012
13 July 2010
On the Exposure Draft
ED/2010/4 Fair Value Option
For Financial Liabilities
Dear Sir/Madam,
The Bank of Russia has considered the Exposure Draft ED/2010/4 Fair Value Option
for Financial Liabilities (hereafter referred to as exposure draft) and informs the following.
Questions 1 and 2
We are of the opinion that fair value option for financial liabilities, excluding derivative
financial instruments and situations when by collectively managing liabilities with relating
financial assets designated at fair value through profit and loss liabilities treatment at amortised
cost creates accounting mismatch, should be limit maximum. We propose to reflect all fair value
changes of such financial liabilities in profit and loss statement according existing conditions.
Gains and losses resulting from changes in a liability’s credit risk should not be
reclassified because in general if the entity repays the contractual amount, the cumulative effect
over the life of the instrument of any changes in the liability’s credit risk will net to zero.
Questions from 3 to 6
We are of the opinion that representing in profit and loss statement changes in financial
liability’s credit risk should be retained existing conditions, rather than should be presented in
other comprehensive income or in equity.
In accordance with IFRS 9 Financial Instruments the most of financial assets
designated at amortised cost, excluding equity and individual debt financial assets in accordance
with credit institution’s business model for managing the financial assets, whose objective is to
hold assets in order to collect contractual cash flows. Business model for managing the financial
assets in respect of contractual cash flows do not based on strategy pre-term redemption of
financial liabilities when their fair value declines by means of own credit risk increases.
Question 7
Gains and losses resulting from changes in a liability’s credit risk should not be
reclassified because in general if the entity repays the contractual amount, the cumulative effect
over the life of the instrument of any changes in the liability’s credit risk will net to zero.
We are of the opinion that representing in profit and loss statement changes in financial
liability’s credit risk should be retained existing conditions, rather than should be presented in
other comprehensive income or in equity.
Question 8
We agree with the statement that guidance in IFRS 7 should be used for determining
the amount of the change in fair value that is attributable to changes in liability’s credit risk and
for presenting information in profit and loss statement.
Question 9
We agree with IASB’s opinion that if entity elects to apply these amends early,
preparers of financial statements must at the same time apply any already published requirements
in IFRS 9 Financial instruments that it does not already apply (paragraph 4 of the exposure
draft). Alternatively it can lead to incomparability information among entities.
Question 10
We are of the opinion that representing in profit and loss statement changes in financial
liability’s credit risk should be retained existing conditions, rather than should be presented in
other comprehensive income or in equity.
We propose to consider the possibility following up dynamic of changes in liability’s
credit risk through disclosures in financial statements in paragraph 10 IFRS 7 Financial
instruments: Disclosures.
Yours sincerely,
R. Erohina
Acting Chief Accountant of the Bank of Russia –
Director of the Accounting and Reporting Department
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