ESMA comments on the tentative IFRS Interpretations Committee agenda decision on IFRIC 14

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05 Jun, 2015

The European Securities and Markets Authority (ESMA) has published its comment letter referring to the tentative agenda decision taken by the IFRS Interpretations Committee (IFRS IC) on IFRIC 14 ‘IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’ as published in the March 2015 IFRIC Update.

The comment letter refers to the IFRS IC’s tentative agenda decision not to add to its agenda the request related to the period over which the future minimum funding requirement for contributions to cover future service applies.

ESMA welcomes the clarification provided by the IFRS IC that an entity should assume that funding would continue after the minimum period that has been agreed with the trustees.  However, ESMA believes that further guidance is required on the accounting treatment in circumstances when the level of contributions will be subject to future negotiations after the minimum period.  ESMA comments:

While ESMA agrees that the issue could be addressed through an agenda decision, ESMA acknowledges that the need for clarifications referred to in this letter might lead the IFRS IC to reconsider whether the agenda decision is the appropriate tool to address the issue identified in the submission. Consequently, the IFRS IC might need to reconsider whether, in light of the need for this clarification, a sufficient guidance exists so that neither an interpretation nor an amendment to the Standard are necessary, and therefore, whether this issue should be added to its agenda.

The full comment letter is available on the ESMA website.

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