Procedimientos e Instructivos del Sistema de gestión de la Calidad

The FASB and IASB are working on a joint project on financial instruments that is intended to address the recognition and measure- ment of all financial instruments, including impairment and hedge accounting. Once finalized, the new guidance will replace all of the FASB’s and IASB’s respective financial instrument guidance. The two Boards have, however, been working on different timetables. The IASB has been conducting its work in separate phases, the first of which resulted in the November 2009 issuance of IFRS 9, Financial Instruments (subsequently updated in October 2010). In December 2011, the IASB issued an amendment to IFRS 9 that delays the effective date to annual periods beginning on or after January 1, 2015, with early application continuing to be permitted. The original effective date was for annual periods beginning on or after January 1, 2013. In January 2012, the FASB and the IASB decided to jointly redeliberate selected aspects of the classification and measurement guidance in IFRS 9 and the FASB’s tentative classification and measurement model for financial instruments to reduce key differences between their respective classification and measurement models. These and other developments are discussed in the Recent/proposed guidance section. The remainder of this section focuses on the current US GAAP and IFRS guidance.

Under current US GAAP, various specialized pronouncements provide guidance for the classification of financial assets. IFRS currently has only one standard for the classification of financial assets and requires that financial assets be classified in one of four categories: assets held for trading or designated at fair value, with changes in fair value reported in earnings; held-to-maturity investments; available-for-sale financial assets; and loans and receivables.

The specialized US guidance and the singular IFRS guidance in relation to classification can drive differences in measurement (because classification drives measurement under both IFRS and US GAAP).

A detailed discussion of industry-specific differences is beyond the scope of this publication. However, for illustrative purposes only, we note that the accounting under US GAAP for unlisted equity securities can differ substantially depending on industry-specific require- ments. US GAAP accounting by general corporate entities that do not choose the fair-value option, for example, differs significantly from the accounting by broker/dealers, investment companies, and insurance companies. In contrast, the guidance in relation to unlisted equity securities under IFRS is the same regardless of the entity’s industry.

Under US GAAP, the legal form of the financial asset drives classification. For example, debt instruments that are securities in legal form are typically carried at fair value under the available-for-sale category (unless they are held to maturity)—even if there is no active market to trade the securities. At the same time, a debt instrument that is not in the form of a security (for example, a corporate loan) is accounted for at amortized cost even though both instruments (i.e., the security and the loan) have similar economic charac- teristics. Under IFRS, the legal form does not drive classification of debt instruments; rather, the nature of the instrument (including whether there is an active market) is considered. Additional differences involve financial assets that are carried at amortized cost. For such assets, both IFRS and US GAAP use the effective interest method to calculate amortized cost and allocate interest income over

different impairment measurement criteria. In considering whether a decline in fair value is other than temporary, US GAAP looks to (1) management’s intent and ability to hold the security and (2) expectations of recovery of the cost basis in the security. The impair- ment trigger drives the measurement of the impairment loss. Under IFRS, the impairment triggers for available-for-sale debt instru- ments and loans and receivables are the same; however, the available-for-sale impairment loss is based on fair value while impairment of loans and receivables is calculated by discounting estimated cash flows (excluding credit losses that have not been incurred) by the original effective interest rate. Additional differences around reversals of impairment losses and impairment of equities also must be considered.

There are fundamental differences in the way US GAAP and IFRS currently assess the potential derecognition of financial assets. The differences can have a significant impact on a variety of transactions such as asset securitizations. IFRS focuses on whether a qualifying transfer has taken place, whether risks and rewards have been transferred, and, in some cases, whether control over the asset(s) in question has been transferred. US GAAP focuses on whether an entity has surrendered control over an asset, including the surren- dering of legal and effective control. The fundamental differences are as follows:

• Under US GAAP, derecognition can be achieved even if the transferor has significant ongoing involvement with the assets, such as the retention of significant exposure to credit risk.

• Under IFRS, full derecognition can be achieved only if substantially all of the risks and rewards are transferred or the entity has neither retained nor transferred substantially all of the risks and rewards and the transferee has the practical ability to sell the trans- ferred asset.

• Under IFRS, if the entity has neither retained nor transferred substantially all of the risks and rewards and if the transferee does not have the practical ability to sell the transferred asset, the transferor continues to recognize the transferred asset with an associated liability in a unique model known as the continuing involvement model, which has no equivalent under US GAAP.

• The IFRS model does not permit many factoring transactions (e.g., sale of receivables with recourse) to qualify for derecognition. Most factorings include some ongoing involvement by the transferor that causes the transferor to retain some of the risks and rewards related to the transferred assets—a situation that may preclude full derecognition under IFRS, but not under US GAAP. Further details on the foregoing and other selected current differences (pre-IFRS 9 and IFRS 13) are described in the following table.

Classification

Available-for-sale financial