Research On The Evolution Of IASB’s Classification And Measurement Standards Of Financial Instruments

How to use accounting language to record the value of financial instruments and disclose their risk is an important issue because of the rapid development of financial market and innovation of financial instruments. The birth and development of financial instruments accounting standards, because of its great influence and frequent amendment, drew lots of attention of the standard setters, regulators and accounting academia. Compared with other financial instruments accounting standards like disclosure standards, the standards of classification and measurement of financial instruments has been subject to extensive discussion, since the accounting information is directly linked with financial statement and has a direct impact on the financial data.In order to adapt to financial innovation and improve the accuracy and relevance of financial instruments accounting information, accounting standards of financial instruments has become one of the most criteria revised. Originally, released in1986, IAS25Investment is the only standard which involves the basic financial instrument (debt and equity securities) accounting. Until12years of its release, a completed financial instruments standards, IAS39Financial Instruments:Recognition and Measurement, which been revised for many times later, finally came out. After the outbreak of the financial crisis, the pressure from different parties forced IASB started replacement of IAS39(IFRS9) project. In November28,2012, IASB issued exposure draft Classification and Measurement:Limited amendment to IFRS9. In February25,2014, IASB has completed all the stage for comments on IFRS9and plans to launch the revised vision of IFRS9in the second quarter of2014. China’s accounting standards setting of financial instruments has been always relate to activities and practice of IASB. Accordingly, summary of evolution process of financial instruments standards of IASB is important to improve the application and quality of our accounting standards of financial instruments.This paper focuses on development and improvement of the classification and measurement of financial instruments accounting standards and explores the process and logic behind it. The paper helps to form a clear understanding of the evolution and simultaneously leads to the expectation of the convergence and development of our financial instrument standards. After the research on carding standards evolution and the sub study, the paper believes that obvious reversal and even retrogression happened in the process of formulating accounting standards of financial instruments. The reason, besides the game of different interest groups, mainly lay in the application of fair value and the conciseness and operability of the standards. Faced with the two problems, IASB had different attitudes. For the former, IASB always adhered to gradually expand the scope of application of fair value in financial instruments. Even after the financial crisis, faced with high pressure, IASB did not make any compromise in the scope of application of the fair value. For the latter, IASB gradually explored the balance between the quality of accounting information and the conciseness and operability of standards, and was more careful in the standards simplification.Finally, the paper presents three enlightenments of the evolution of IASB standards on China’s accounting standards of financial instruments. Firstly, the development ofthe application of fair value should match the maturity of capital markets. Secondly, the process of simplification and revision shall be smooth. The last one is standards setters shall consider formulating a comprehensive financial instruments standards.