From: Paul Ebling Sent: Monday, March 30, 2009 6:28 PM To: Svetlana Boysen Subject: FW: EFRAG's draft response to the Financial Crisis Advisory Group's request for input From: Sarah Hardman Sent: Mon 3/30/2009 18:26 To: commentletter@efrag.org Cc: Paul Ebling Subject: FW: EFRAG's draft response to the Financial Crisis Advisory Group's request for input From: Christian.Hoeffken@dzbank.de [mailto:Christian.Hoeffken@dzbank.de] Sent: Monday, March 30, 2009 6:13 PM To: INFO Cc: Yvonne.Donkoff@dzbank.de Subject: AW: EFRAG's draft response to the Financial Crisis Advisory Group's request for input Dear Sirs, I appreciate to response on the EFRAG draft comment letter on behalf of the DZ BANK, the german financial service provider in the cooperative financial services network. Mainly the answers and positions stated in the EFRAG draft comment letter are in line with the positions of the DZ BANK. There are only the following aspects the DZ BANK would like to supplement to the positions in the draft comment letter: * Fair Value Measurement, especially in inactive or disrupted markets, should be improved to an economical based principal, less driven by the focus on exit prices at a reporting date as the existing model is. Especially for monetary financial instruments with expected future cash flows whithout any trading intention of the holder it is obviously that downsizing of such instruments to less than the expected future cash flows does not display a fair value. It should be questined if those disturbed market values increase the information for users of financial reporting. Therefore as stated at the end of the EFRAG draft comment letter a serious discussion about the fair value measurement requirements is needed. * The main goal should not be the extension of financial disclosures of IFRS. Instead simplifying and disaggregating the categorisation and measurment requirements of IAS 39 should be the main purpose. There are so much information provided in financial disclosures that the question should be raised if users could handle these quantity any more. Furthermore we are concerned about the risk that the quantity of information diminishes its quality, because useful information would be overlooked in the soaring amount of disclosures. * "Through the cycle" or "dynamic provisioning" are helpful to soften the pro-cyclicality of fair value measurement. Nearly any entity that accounts in accordance with IFRS or US-GAAP has to solve problems due to the volatility and pro-cyclicality of unrealised measurement effects in their balance sheet and p&l. This was although a main concern raised by entities during the IFRS SME project. To convey the usefulness and understandability of "dynamic provisioning" for users of financial reportings it would be more appropriate that the amounts due to "dynamic provisioning" influence the balance sheet and p&l figures directly as an expense in the income statement. This would incorporate the aspect of unrealised gains and losses as non-distributable amounts in a more simplified and apparent way than off balance sheet methods would do like earmarking or footnotes. * The improvement and simplifying of the exisitng loan loss provisioning should be lead towards economical driven principles like those that are incorporated in the expected loss model. This would be in line with "dynamic provisioning", because both models are derived from an economical view and would allow the use of allowance / loan loss accounts in the balance sheet and with a deduction of the income figure. * By developing economical based principals for categorisation requirements of financial instruments the standard setters should have in mind the concerns raised by entities about the practicability of those categorisation requirements. As an example should be mentioned the provisions of the held to maturity category with its tainting rule. Especially in times of volatil and disrupted markets the categoriy is not flexibel enough for short time reactions due to the extremely changed economic circumstances. Furthermore we would appreaciate to place the 4 following points as short term improvements related to the question number 7: * Same level playing field in IFRS and US-GAAP for the treatment of embedded derivatives * Same level playingfield in IFRS and US-GAAP for fair value measurement purposes of liabilities * A discussion about the reclassification possibility of financial instruments out of the fair value option * The short cut method for hedge accounting purposes as established in US-GAAP * To support the educational guidance proposed by the FASB Staff Position Paper FSP FAS 115- e Kind regards, Christian Höffken DZ BANK AG Group Finance Koordination Grundsatzfragen F/GFZK Platz der Republik 60325 Frankfurt am Main T +49 69 7447 42592 F +49 69 7447 1902 mailto:Christian.Hoeffken@dzbank.de _________________________________________________ DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main Platz der Republik, 60325 Frankfurt am Main Deutschland/Germany http://www.dzbank.de, http://www.125-jahre-dzbank.de mailto:mail@dzbank.de, T +49 69 7447 01, F +49 69 7447 1685 Vorstand/Board of Directors: Wolfgang Kirsch (Vorsitzender/Chief Executive Officer), Dr. Thomas Duhnkrack, Lars Hille, Wolfgang Köhler, Albrecht Merz, Frank Westhoff Aufsichtsratsvorsitzender/Chairman of the Supervisory Board: Rolf Hildner Sitz/Registered Office: Stadt Frankfurt am Main, Amtsgericht Frankfurt am Main Handelsregister/Register of Companies: HRB 45651 _________________________________________________ Bitte denken Sie an unsere Umwelt, bevor Sie diese E-Mail ausdrucken/ Please consider the environment before printing this email EFRAG Newsletter 21.03.2009 23:44 An Yvonne Donkoff/GF/Frankfurt/DZ BANK@DZBANK Kopie Them a EFRAG's draft response to the Financial Crisis Advisory Group's request for input EFRAG has updated its website and is pleased to announce that it has published the following news item: EFRAG's draft response to the Financial Crisis Advisory Group's request for input EFRAG invites comments to its draft response to the Financial Crisis Advisory Group's request for input. The deadline for comments is 30 March 2009. Read the complete News EFRAG AISBL – IVZW Square de Meeûs 35 B-1000 Brussels Tel: +32-(0)2 210 44 00 Fax : +32(0)2 210 44 01 E-mail: info@efrag.org Website: www.efrag.org To unsubscribe from this email service, please follow the link below. To unsubscribe click here