This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice (http://www2.deloitte.com/ca/en/legal/cookies.html) for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Hoogervorst discusses major IASB projects at European Parliament meeting

  • IFRS - IASB Image
  • IFRS  - Speech Image

Jan 11, 2016

On January 11, 2016, the International Accounting Standards Board Chairman Hans Hoogervorst exchanged views with the Committee on Economic and Monetary Affairs (ECON) of the European Parliament. Mr. Hoogervorst discussed four high-priority projects for the IASB in 2016: IFRS 9, the leases standard, insurance contracts and the Conceptual Framework.

Mr. Hoogervorst began by discussing IFRS 9 and noted that the introduction of an expected loss model for credit losses is the most important change to the standard. He noted the positive reception the standard has gotten throughout Europe.

The IASB's long-awaited leases standard will be published on Wednesday, January 13. Mr. Hoogervorst promoted the comparability and "economic reality" that IFRS 16 will bring to listed companies around the world. He admitted that it wouldn't be popular with everyone and that half of all listed companies would be affected by changes to leases guidance. However, he affirmed that the IASB had "looked at all the possible risks very carefully" and concluded that the risks and costs associated with the new standard are "manageable".

Moving on to insurance, Mr. Hoogervorst said that the IASB expects to (1) finish its deliberations "soon" and (2) publish a new standard "around the end of 2016". He noted the importance of the insurance project:

Today’s accounting Standards for the insurance contracts are highly defective. There is no real global standard and there is a wide variety of practices around the world. Some of these standards provide information that is clearly wrong.

Mr. Hoogervorst noted that the IASB's new standard would be based on current measurement, but that the complexity of the insurance industry is making it difficult to resolve all the accounting issues involved. He said that the effective date of the new insurance contracts standard would be later than that of IFRS 9, but understands that this will be problematic to the insurance industry:

We have recently exposed a possible solution to this problem, which includes the option of a deferral of IFRS 9 for pure insurance companies. For conglomerates that combine insurance with banking activities, we will make it possible to adjust Profit or Loss for the effects of IFRS 9 through what we have called the overlay approach. We will evaluate the feedback we get on our proposals in the spring and expect to finalize our decisions well before the summer.

For more information, see Mr. Hoogervorst's full remarks on the IASB's Web site or a video recording of the entire ECON meeting, which also features a Q&A session with the Chairman of the IFRS Foundation Trustees, Michel Prada.

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.