As indicated above the G100 supports the inclusion of the disclosure requirements in a single standard together with the proposed additional disclosures.
 

Is this proposal appropriate? If not, why not? What, if any, alternative disclosures would you propose to meet the stated objective?

The G100 supports this proposal subject to retention of the ‘impracticable’ relief. The disclosure of fair values of collateral pledged as security provides relevant and useful information to users about the entity’s effective exposure to credit risk.
 

Is the proposed disclosure of a sensitivity analysis practicable for all entities?

If not, why not and what, if any, alternative disclosures of market risk would you propose to meet the stated objective of enabling users to evaluate the nature and extent of market risk?

The G100 supports the disclosure of a sensitivity analysis. However, guidance on the application of sensitivity analysis would help ensure that comparability between entities is achieved. This would be particularly so for entities engaged in the financial services sector of the economy.
 

Is this proposal appropriate? If not, why not? Should it be limited to only externally imposed capital requirements? What, if any, alternative disclosures would you propose?

The G100 supports disclosure of information relating to the financial capital of the entity. However, the G100 does not support the disclosure relating to internally imposed/determined capital targets as these are used primarily in assisting management in performing its duties and assessing performance. The proposals do not identify why such disclosure is relevant in respect of capital when other performance targets are not required to be disclosed. Whether such targets are disclosed and performance in relation to them assessed should be a matter for management to determine in the context of the circumstances of the entity. For example, in some cases the specification of such targets and performance in relation to them may be central to the strategic initiatives of the entity and, as such, be commercially sensitive. In other cases the capital targets may not have a strategic imperative and management may consider that the disclosure may provide useful information to users without impacting on commercial sensitivity.
 

Entities adopting IFRSs and the draft IFRS for the first time before 1 January 2006 would be exempt from providing comparative disclosures for the draft IFRS in the first year of adoption (see Appendix B, paragraph B9).

Are the proposed effective date and transition requirements appropriate? If not, why not? What alternative would you propose?

The G100 supports this approach to the application date and the provision of comparative information.
 

Do you agree that the disclosures proposed by the draft IFRS should be part of the financial statements? If not, why not?

In the absence of a general requirement for a management report including discussion of the entity’s risk exposures, including those relating to financial instruments and risk management strategies and activities, the G100 supports the inclusion of requirements relating to risk disclosures in the exposure draft.
 

Do you agree that the risk disclosures in IFRS 4 should be amended to make them consistent with the requirements proposed in the draft IFRS? If not, why not and what amendments would you make pending the outcome of phase 11 of the Board’s Insurance project?

The G100 believes that the risk disclosures required should be consistent irrespective of the nature of the entity’s activities and acknowledge that the expectations of financial reports of users of entities engaged in finance and insurance activities is likely to be greater than it would be for other entities.
 

Is the Implementation Guidance sufficient? If not, what additional guidance would you propose?

The G100 considers that the guidance is adequate.
 

Disclosures similar to (a)(ii) above are proposed in paragraph 31 of the draft IFRS (and are currently required by paragraph 92 of IAS 32) and disclosures similar to (a)(iii) are proposed in paragraph 21(a).

Do you agree that the requirements in the draft IFRS provide adequate disclosure of fair value compared with those proposed in the FASB’s Exposure Draft? If not, why not, and what changes to the draft IFRS would you propose?

The G100 considers that an objective of the IASB/FASB convergence program should be to achieve the same recognition, measurement and disclosure requirements particularly in respect of new projects and where existing standards are being revised. As such, the G100 believes that disclosure of the impact of changes in fair values on earnings should be considered in the context of the project on reporting financial performance and not as part of this project. In this case the relevance and consistency of disclosures in general relating to performance reporting is best determined as a package rather than on a piecemeal basis.
 

• Paragraph 31(c): Because of the stringent requirements relating to classifying investment securities as held to maturity, entities, particularly financial institutions, are likely to classify such securities as available for sale. A consequence of this is that the disclosure load associated with explaining valuation assumptions and variants for a wide range of debt and equity securities (changes in fair value of which are recognised in equity not periodic earnings) will be extremely onerous and costly in relation to the benefits to users.
   
• Paragraph 40(a): The proposal to show amounts ‘past due’ is onerous and impractical and is likely to require entities to modify systems to generate the information as at a reporting date. In this regard the definition of ‘past due’ is too restrictive and should take account of normal commercial and industry practice in identifying past due amounts.