In June 2018, the International Financial Standards Board (IASB)
published its discussion paper on financial instruments with
characteristics of equity (FICE). As part of its conceptual
framework project, the discussion paper deals with improvements of
IAS 32 Financial Instruments: Presentation with special
regard to complex financial instruments.
Background
The IASB found that the implementation of IAS 32 has gone well
for most of the standard financial instruments (
read our article on IAS 32's classification requirements
for preference shares). However, rapid innovation in recent years
has caused the structure of financial instruments to grow more
complex, creating challenges in applying the requirements of the
standard and consequently leading to varying accounting treatments.
Due to this variance, it became harder for investors to assess how
these financial instruments may affect companies' financial
positions and performances.
