EFRAG calls for deferral of consolidation and joint arrangement standards
The European Financial Reporting Advisory Group (EFRAG) has publicly released a letter it is has written to the IASB calling for the deferral of the effective date of the 'suite of standards' on consolidation, joint ventures and disclosures.
In the letter, EFRAG requests a deferral of the effective date of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures.
EFRAG's reasons for requesting a deferral include:
- during EFRAG field-tests of IFRS 10 and IFRS 11, some participants noted that they have concerns that the mandatory effective date of 1 January 2013 would not allow them sufficient time to implement the new requirements and make the required assessments. Concerns about implementing IFRS 10 are concentrated in the financial services and insurance industries, whereas concerns about IFRS 11 relate to the need to access detailed information regarding joint arrangements
- the IASB is currently undertaking its project on investment entities and is also considering possible amendments to the transitional requirements around IFRS 10 (including at the December IASB meeting this week), both projects affect the application of IFRS 10 and create uncertainty for constituents
- although the above concerns relate to IFRS 10 and IFRS 11, EFRAG notes that given the considerable interaction between the requirements of the standards in the package, all standards must continue to have the same effective date, requiring a deferral for all five standards.
The standards are currently effective for annual periods beginning on or after 1 January 2013. EFRAG believes that the effective date of the Standards should be deferred to the later of (a) 1 January 2014 or (b) 12 months after the amendments to IFRS 10 and the standard on investment entities have both been published.
Click for access to the EFRAG letter (link to EFRAG website).