The International Aounting Standards Board (IASB) and the Financial Aounting Standards Board (FASB) today issued mon disclosure requirements that are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a pany’s financial position. The eligibility criteria for offsetting are different in International Financial Reporting Standards (IFRSs) and U.S. Generally Aepted Aounting Principles (US GAAP).

Offsetting, otherwise known as ting, is the presentation of assets and liabilities as a single amount in the statement of financial position (balance sheet). Unlike IFRSs, US GAAP allows panies the option to present in their balance sheets derivatives that are subject to a legally enforceable ting arrangement with the same party where rights of set-off are only available in the event of default or bankruptcy.

To address these differences between IFRSs and US GAAP, in January 2011 the IASB and the FASB issued an exposure draft that proposed new criteria for ting that were narrower than the current nditions currently in US GAAP. However, in response to feedback from their respective stakeholders, the boards decided to retain their existing offsetting models and instead issue new disclosure requirements to allow investors to better pare financial statements prepared in aordance with IFRSs or US GAAP.

The mon disclosure requirements also improve transparency in the reporting of how panies mitigate credit risk, including disclosure of related llateral pledged or received. Further information is included in a project summary and feedback statement, also issued today.

Hans Hoogervorst, Chairman of the IASB, said: “These disclosures will help investors to bridge differences in the offsetting reporting requirements of IFRSs and US GAAP, while the additional requirements will also provide better information on how panies mitigate credit risk related to offsetting. That said, using disclosures to bridge differences in offsetting requirements was plan “B” for both boards.”

Leslie F. Seidman, Chairman of the FASB, said “The expanded disclosures are responsive to the feedback we received from investors, who wanted to understand both the gross and the amounts for items offset in aordance with legally enforceable ting arrangements. We are also requiring expanded information about the llateral pledged and held in these arrangements.”

panies and other entities are required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The required disclosures should be provided retrospectively.

An interactive webcast by the IASB on the amendments will be held at 10:30 and again at 15:00 GMT on 19 December 2011. To register, please click here.

More information about the project including a project summary and feedback statement and an IASB podcast introducing the amendments can be aessed via the IASB’s project web at: .

Notes to editors:

The IFRS requirements are set out in amendments to Disclosures—Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) and in Aounting Standards Update No. 2011-11, Balance Sheet (ic 210): Disclosures about Offsetting Assets and Liabilities, for US GAAP. These requirements are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application will be required to maximise parability.