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EFRAG draft comment letter on limited amendments to IFRS 9

01 Jan 2013

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB's Exposure Draft ED/2012/4 'Classification and Measurement: Limited Amendments to IFRS 9 (proposed amendments to IFRS 9 (2010))' which was published on 28 November 2012.

EFRAG welcomes the IASB’s decision to consider making limited amendments to IFRS 9 that are intended to address accounting mismatches arising from the application of different measurement models to financial assets and insurance liabilities. However, EFRAG also makes several suggestions regarding further improvements aiming at more clarity and at more useful information.

Regarding the main point of the IASB proposals, the introduction of a 'fair value through other comprehensive income' (FVOCI) measurement category for particular financial assets, EFRAG members did not reach a consensus:

With regards to the introduction of a third business model in IFRS 9, EFRAG TEG members have divergent views on the IASB’s proposals in the ED. Some EFRAG TEG members agree with the IASB’s proposals, whereas some other members believe that the measurement category at fair value through other comprehensive income (FV-OCI) should rather be introduced in IFRS 9 as an option at initial recognition for companies to avoid accounting mismatches like those arising from the interaction between the classification and measurement requirements in IFRS 9 and the future IFRS on insurance contracts. Some EFRAG TEG members are also concerned that the application of the new requirements is unclear. These members believe that there are uncertainties both with the dividing line between amortised cost and FV-OCI and between fair value through profit or loss and FV-OCI.

    Comments on the letter are invited by 18 March 2013.

    Click for:

    • EFRAG press release with link to the draft comment letter (link to EFRAG website).
    • Our previous story on the Exposure Draft ED/2012/4 Classification and Measurement: Limited Amendments to IFRS 9 (proposed amendments to IFRS 9 (2010)).
    • Deloitte's IFRS in Focus newsletter on the proposals for limited amendments to IFRS 9.