The existing requirements for the reporting of financial instruments are widely regarded as difficult to understand, interpret and apply and constituents have urged the IASB to develop standards that are principle-based and less complex. The document is the first stage in a project which aims to replace IAS 39 Financial Instruments: Recognition and Measurement. 

The discussion paper, Reducing Complexity in Reporting Financial Instruments, analyzes the main causes of complexity in reporting financial instruments and proposes possible intermediate approaches to address some of them. Those approaches seek to improve and simplify measurement and hedge accounting by amending or replacing the existing requirements.

In addition, the paper sets out the arguments for and against a possible long-term approach that would use one measurement method for all types of financial instruments in the scope of a financial instruments standard.

The IASB invites comments on the discussion paper by Sept. 19, 2008.