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EFRAG issues final endorsement advice and effects study report on IFRIC Interpretation 21 Levies

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

13 Sep 2013

The European Financial Reporting Advisory Group (EFRAG) has submitted to the European Commission its endorsement advice letter and effects study report on IFRIC Interpretation 21 'Levies' (IFRIC 21).

IFRIC 21 provides guidance on when to recognise a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain. IFRIC 21 identifies the obligating event for the recognition of a liability as the activity that triggers the payment of the levy in accordance with the relevant legislation. The Interpretation clarifies that 'economic compulsion' and the going concern principle do not create or imply that an obligating event has occurred. 

EFRAG supports the adoption of IFRIC 21 and recommends its endorsement.  EFRAG has concluded that IFRIC 21 meets the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.     

EFRAG’s conclusion is supported by an Effects Study Report which considered the costs and benefits of implementing IFRIC 21. EFRAG’s assessment is that the benefits for preparers and users in implementing IFRIC 21 outweigh the costs.

The endorsement advice was passed by the EFRAG's Technical Experts Group (TEG) with two dissenting opinions.

Concurrently, EFRAG has updated its endorsement status report to reflect the final EFRAG endorsement advice on IFRIC 21. 

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