EFRAG issues draft comment letter on IASB's Exposure Draft ED/2013/11 Annual Improvements to IFRSs 2012–2014 Cycle

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

08 Jan 2014

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB's Exposure Draft ED/2013/11 'Annual Improvements to IFRSs 2012–2014 Cycle' which was published on 11 December 2013. EFRAG agrees with most of the proposals in the Exposure Draft (ED) but has expressed concern about the proposed amendments to IAS 19 'Employee Benefits'.

The IASB uses the annual improvements project to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project.  The ED proposes amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting

The proposed amendment to IAS 19 clarifies that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid (thus, the depth of the market for high quality corporate bonds should be assessed at currency level).

EFRAG “supports the IASB’s intention to develop guidance dealing with countries where a high-quality corporate bond market does not exist and that use the same currency as other countries".  However EFRAG identifies a number of implementation issues with the proposed amendments to IAS 19 such as “jurisdictions adopting stronger currencies of other countries” and comments that “it is unclear if the proposals would result in an outcome that is consistent with the objectives the IASB is trying to achieve”.  EFRAG also asks constituents to respond whether they are aware of any circumstances where the amendments to IAS 19 will not result in meaningful outcomes.

Before finalising the IAS 19 proposals, EFRAG comments that the IASB should “clarify the objectives underlying the selection and use of a discount rate in measuring post-employment benefit obligations” to allow constituents to be able to use their judgement in applying the requirements of paragraph 83 of IAS 19.

Comments on the EFRAG draft comment letter invited by 7 February 2014. 

Click for:

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.