Deloitte comment letter on exposure draft on the mandatory effective date of IFRS 9
Deloitte's IFRS Global Office has submitted a letter of comment to the International Accounting Standards Board (IASB) on its Exposure Draft ED 2011/3 'Mandatory Effective Date of IFRS 9'.
In the comment letter, we agree with the views of the exposure draft that deferral of the mandatory effective date of IFRS 9 is necessary due to the level of uncertainty revolving around the IFRS 9 project's timeline. In addition, we agree that limited relief from restating comparatives for entities early applying in a period beginning before 1 January 2012 should not be extended. The following is an excerpt from the letter:
|We support the restatement of comparative information whenever this is practicable and provides valuable information to users. However, we note that the basis for restating comparatives as described in IFRS 9(2010): 7.2.1 is limited retrospective application as it only restates those items that continue to be recognised at the date of initial application (being the start of the first reporting period in which the entity applies IFRS 9). This results in comparative information being a mix of IAS 39 (for items derecognised before the date of initial application) and IFRS 9 (for items still recognised at that date). In addition, we note that the transitional requirements of IFRS 1 are not aligned with those for existing IFRS preparers as they require the classification of a first time adopter’s financial items to be based on conditions existing at the date of transition to IFRSs.|
We also question whether is its appropriate for many different versions of IFRS 9 to be applied well after the Standard has been updated. We prefer that an early adopter of IFRS 9 apply the latest version of the Standard issued at the beginning of its earliest comparative period, which we believe will reduce the confusion for users trying to determine which version of the Standard an entity should apply.