EFRAG recommends adoption of investment entities amendments, updates endorsement status report
The European Financial Reporting Advisory Group (EFRAG) has updated its report showing the status of endorsement, under the EU Accounting Regulation, of each IFRS, including standards, interpretations, and amendments. The latest report follows the issue of an endorsement advice letter on the IASB's investment entities amendments.
In the endorsement advice letter, EFRAG concludes that the investment entities amendments satisfy the technical criteria for endorsement and accordingly, recommends the adoption of the amendments in the European Union.
The investment entities amendments were issued on 31 October 2012 to amend IFRS 10 Consolidated Financial Statements to provide entities that meet the definition of an 'investment entity' an exemption from consolidating certain investments in subsidiaries.
In the endorsement advice letter, EFRAG makes the following comments regarding the consolidation exemption:
EFRAG generally believes that a reporting entity should not differentiate between types of entities when applying the control model of consolidation in IFRS 10 Consolidated Financial Statements. However, EFRAG notes that the Amendments respond to the concerns of users of financial statements, who expressed support for a consolidation exception for subsidiaries of investment entities, and argued that their interests are best served by having a single line measurement basis based on fair value, instead of consolidation of subsidiaries of investment entities.
The accompanying effects study report discusses the costs and benefits of implementing the investment entities amendments and notes they "would result in significant cost savings for investment entity preparers and users of the financial statements of investment entities".
- EFRAG endorsement status report dated 18 February 2013
- EFRAG endorsement advice letter on the investment entities amendments (link to EFRAG website)
- EFRAG effects study report (link to EFRAG website).