ESMA comment letter on the IFRS Interpretations Committee’s tentative agenda decisions on IFRS 5

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03 Dec, 2015

The European Securities and Markets Authority (ESMA) has published a comment letter referring to tentative agenda decisions on the application of IFRS 5 taken by the IFRS Interpretations Committee (IFRS IC).

The comment letter refers to the IFRS IC’s tentative agenda decision not to add to its agenda the discussion of various application issues relating to the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

ESMA believes that these application issues "potentially impair the relevance, comparability and understandability of financial statements" and "strongly encourages" the IFRS IC to recommend that the IASB undertake a fundamental review of the existing standard either in the form of a research project or a post-implementation review.

In addition ESMA draws attention to the IFRS IC’s tentative decision not to add to its agenda a request to clarify how to present intragroup transactions between continuing and discontinued operations. ESMA expresses a concern that “the information provided in the statement of profit or loss and other comprehensive income may in some cases not result in useful information for assessing the financial effects of discontinued operations".  ESMA recommends that the IFRS IC brings this issue to the IASB's attention with a request to address this issue further.

The IFRS 5 comment letter can be found on the ESMA website.

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