International Accounting
Standards Board
30, Cannon Street, London EC4M 6XH, United Kingdom
27 July 2009
On the Exposure Draft
ED/2009/3 Derecognition
(proposed amandments to IAS39 and IFRS7)
Dear Sir/Madam
The Bank of Russia has considered the Exposure Draft ED/2009/3 Derecognition
(proposed amendments to IAS39 and IFRS7) proposed by the International Accounting
Standards Board and informs the following (hereafter – ED/2009/3).
Question 1
We consider that the determination of the item (ie the Asset) to be evaluated for
derecognition and the assessment of continuing involvement should be made at the level of the
reporting entity. We believe this is a significant step in preparation of consolidated financial
statement of the Group, when control over the asset at the level of the participant of the Group
can be lost, but remains at the level of the Group (paragraphs 15A, AG37A and AG47A).
Question 2
We agree with the criteria proposed in paragraph 16A for what qualifies as the
item (ie the Asset) to be assessed for derecognition, because derecognition can be applied to a
part of a financial asset (or a part of a group of financial assets) only if that part comprises
specifically identified cash flows or a proportionate share of the cash flows from that financial
asset (or that group of financial assets) (ie the performance of the part retained does not depend
on the performance of the part transferred, and vice versa).
Question 3
We agree with the definition of a transfer proposed in paragraph 9 as an event that
takes place when one party passes or agrees to pass to another party some or all of the economic
benefits underlying one or more of its assets on condition that transfer does not necessarily result
in derecognition of an asset.
Question 4
We agree that an entity shall derecognise the Asset if it transfers the Asset and has
no continuing involvement in it, as it proposed in paragraph 17A(b). We also agree with the
exceptions made to ‘continuing involvement’ in paragraph 18A.
Question 5
We agree with the proposed ‘practical ability to transfer’ derecognition test in
paragraph 17A(c). We also agree that the ‘transferee’s own benefit’ test is a part of ‘practical
ability to transfer’ test in paragraph 17A(c), because only having a possibility transferee may
transfer the Asset for someone benefit.
Question 6
We agree with the proposed accounting (both recognition and measurement) for
an interest retained in a financial asset or a group of financial assets in a transfer that qualifies for
derecognition (for a retained interest in a financial asset or group of financial assets, see
paragraph 21A; for an interest in a financial asset or group of financial assets retained indirectly
through an interest in that entity (which gives it the right to some of the cash flows from that
asset or group of assets), see paragraph 22A).
Question 7
We agree that proposed approach as a whole should be established as the new
approach for determining the derecognition of financial assets.
We believe that the alternative approach should not be established as the new
approach for determining the derecognition, because for example estimation of fair value by
retained interest in the asset for category ‘Loans and receivables’ can cause difficulties in the
absence of active market (paragraphs AV24 – AV26).
At the same time you may wish to consider the use in the exposure draft some of
the clear and simple in use proposals made in the alternative approach, specifically:
- while making decision about derecognition of financial asset an entity shall consider
the whole transfer arrangement, including any side agreements or sets of simultaneous
agreements entered into contemporaneously with or in contemplation of the transfer of the
financial asset.
Question 8
We agree that proposed approach to derecognition, represented in ED/2009/3, and
approach to consolidation, proposed in exposure draft ED10 ‘Consolidated Financial Statement’,
are compatible, because they use similar approach to define control, albeit on different levels.
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We believe that any other aspects of the proposed approaches to derecognition
and consolidation should be considered before the end of the work on exposure drafts to avoid
inconsistency between these two projects.
If the Board have to consider adoption of the alternative view, we believe, that
such an approach would not be similar to the proposed approach to consolidation. In any case
approaches to definition of control in different standards should consist. So if an entity transfer
control over future economic benefits from the asset, it means that it should derecognise such an
asset. Similarly, if the control over future economic benefits, witch asset can create, is not
transferred, then entity doesn’t sell an asset and thus shouldn’t derecognise it.
Question 9
We agree with the proposed amendments to the principle for derecognition of
financial liabilities in paragraph 39A, because as it mentioned in paragraph BC95 of Basis for
Conclusions this derecognition principle makes liability derecognition more symmetrical with
liability recognition.
Question 10
We agree with the proposed amendments to the transition guidance in paragraphs
106 and 107.
Question 11
We agree with the proposed amendments to IFRS 7 in paragraphs 42A-42F,
which propose requirements for disclosures about derecognition.
Your sincerely,
R. Erokhina
Acting Chief Accountant of the Bank of Russia –
Director of Accounting and Reporting Department
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