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 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.

EFRAG concludes that adoption of IFRS 9 is conducive to the European public good

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

05 May 2015

The European Financial Reporting Advisory Group (EFRAG) has published a draft endorsement advice on IFRS 9 'Financial Instruments'. Endorsement of IFRS 9 had been "postponed" in the European Union, however, following the publication of the final version of IFRS 9 in July 2014 the European Commission requested the EFRAG to deliver its opinion on the new standard.

In the draft endorsement advice published now for comment, EFRAG states that it has come to the following overall conclusion:

IFRS 9 meets the qualitative characteristics of relevance, reliability, comparability and understandability required to support economic decisions and the assessment of stewardship, leads to prudent accounting, and therefore is not contrary to the true and fair view principle. We have also concluded that IFRS 9 is conducive to the European public good.

In assessing whether IFRS 9 Financial Instruments is conducive to the European public good EFRAG came to the following conclusions:

  • Except for classification and measurement of financial assets where a clear conclusion cannot be made, IFRS 9 is an improvement over IAS 39 for all other areas.
  • In the area of convergence with US GAAP which has not been achieved, IFRS 9 will lead to higher quality financial reporting than the equivalent US GAAP standards.
  • There are certain requirements of IFRS 9 that may have potential impacts on investor and issuer behaviour.
  • There are reasonable grounds to believe that a deferral of the effective date of IFRS 9 for insurers until the future insurance contracts standard is effective would be conducive to the European public good.
  • The EU carve-out for macro hedging from IAS 39 will continue to be available for the purposes it was intended.
  • One-off costs connected with IFRS 9 implementation are likely to be significant both for preparers and users whereas only preparers are likely to incur significant ongoing costs. Both users and preparers are likely to benefit from IFRS 9. Overall, the benefits are likely to outweigh the costs.

As regards the conclusion that a deferral of the effective date of IFRS 9 for insurers until the future insurance contracts standard is effective would be conducive to the European public good, EFRAG has come to the preliminary conclusion to recommend to the European Commission to ask the IASB to globally open an option to defer the effective date of IFRS 9 for insurance businesses and align it with the effective date of the future insurance contracts standard. EFRAG stresses that it is ready to assist the IASB in designing the scope of such an option. In the invitation to comment EFRAG expressly invites all quantitative evidence that can supplement this assessment, including evidence gathered by those who oppose the deferral.

Please click to access the following information on the EFRAG website:

Comments on the draft endorsement advice are requested by 30 June 2015.

EFRAG has updated its endorsement status report to reflect the issuance of the draft endorsement advice. Final endorsement of IFRS 9 is currently expected in the second half of 2015.

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.