This paper analyses various controversial issues arising from the current project of the IASB and FASB to develop a joint conceptual framework for financial reporting standards. It discusses their possible implications for measurement and, in particular, for the use of fair value as the preferred measurement basis. Two competing world views are identified as underlying the debate: a Fair Value View, implicit in the IASB's public pronouncements, and an Alternative View implicit in publicly expressed criticisms of the IASB's pronouncements. The Fair Value View assumes that markets are relatively perfect and complete and that, in such a setting, financial reports should meet the needs of passive investors and creditors by reporting fair values derived from current market prices. The Alternative View assumes that markets are relatively imperfect and incomplete and that, in such a market setting, financial reports should also meet the monitoring requirements of current shareholders (stewardship) by reporting past transactions and events using entity-specific measurements that reflect the opportunities actually available to the reporting entity. The different implications of the two views are illustrated by reference to specific issues in recent accounting standards. Finally, the theoretical support for the two views is discussed. It is concluded that, in a realistic market setting, the search for a universal measurement method may be fruitless and a more appropriate approach to the measurement problem might be to define a clear measurement objective and to select the measurement method that best meets that objective in the particular circumstances that exist in relation to each item in the accounts. An example of such an approach is deprival value, which is not, at present, under consideration by the IASB.
IFRS 17 began as an IASB project to undertake a comprehensive review of accounting for insurance contracts when the IASB added the project to its agenda in September 2001, taking over the equivalent project started in April 1997 by the IASB's predecessor body. During the past 16 years of development, the project was better known as "IFRS 4 Phase II".
The IASB's objective was to develop a common, high-quality standard that will address recognition, measurement, presentation and disclosure requirements for insurance contracts. In February 2014, the FASB tentatively decided to abandon its convergence work with the IASB on insurance contracts that they had started in October 2008. Instead, FASB decided to focus its future efforts on making targeted improvements to the existing U.S. GAAP insurance accounting model.
The IASB issued a discussion paper in 2007 and the first exposure draft "ED/2010/8 Insurance Contracts" in July 2010. A second targeted revised exposure draft "ED/2013/7 Insurance Contracts" was published on 20 June 2013. The IASB finalized its deliberations in February 2016 and made the last set of amendments in February 2017 as a result of the field test activities conducted during the summer of 2016.