The consultative document sets out supervisory expectations for banks relating to sound credit risk practices associated with implementing and applying an expected credit loss accounting framework. We support the Committee’s initiative and provide comments regarding the scope, consistency with IFRS, and audit implications.

Click to access the full comment letter.

Can­di­dates seeking mem­ber­ship should review the criteria in the call for nominations. Nom­i­na­tions are due by 28 May 2015.

The feedback statement reveals “strong support for the ASAF and for the IASB’s com­mit­ment to the ASAF.” Further, the statement notes that the trustees are satisfied with the current ASAF mem­o­ran­dum of un­der­stand­ing but will amend the forum’s terms of reference to extend the terms of mem­ber­ship from two to three years and will adjust the criteria for setting its meeting agenda.

 For more information, see the press release on the IASB’s website.

The objective of the call is for the staff of EFRAG to present to the EFRAG Board a version of the draft endorsement advice.  The current version of the draft endorsement advice concludes:

EFRAG has concluded that the Amendments are not contrary to the principle of ‘true and fair view’ and meet the criteria of understandability, relevance, reliability and comparability required of the financial information needed for making economic decisions and assessing the stewardship of management. EFRAG’s reasoning is explained in Appendix 2.

Having considered all relevant aspects, EFRAG assesses that adopting the Amendments is conducive to the European public good in reducing costs to preparers by providing either certainty in the application of relevant IFRS or relief without imposing significant additional costs on users. Accordingly, EFRAG recommends their adoption. EFRAG’s reasoning is explained in Appendix 3.

Supporting papers for the call and details on how to register can be found on the EFRAG website.

The Update reports on the meeting of the EFRAG Board on 22 April, the EFRAG Board conference call on 9 April, the EFRAG TEG conference call on 23 April, the meeting of the EFRAG Technical Expert Group (EFRAG TEG) on 1 - 2 April as well as the expected written procedures of the EFRAG Board in May.  The Update also lists EFRAG publications issued in April:

• EFRAG’s comment letter on the IASB's Exposure Draft Classification and Measurement of Share-based payment Transactions (proposed amendments to IFRS 2);
• EFRAG’s feedback statement on its Discussion Paper Separate Financial statements;
• EFRAG’s feedback statement summarising responses received to its draft comment letter on the IASB's Exposure Draft Classification and Measurement of Share-based Payment Transactions - Proposed amendments to IFRS 2; and
• EFRAG’s feedback statement summarising responses received to its draft comment letter on the IASB's Discussion Paper Reporting the Financial Effects of Rate Regulation. 

Please click to download the April EFRAG Update from the EFRAG website.

In this decision, the IASB followed its staff's recommendation included in an agenda paper for the meeting. The staff had argued that since IFRS 15 is a converged standard with US GAAP it would be "less confusing for the market if both IFRS and US GAAP preparers apply the new Standard at the same time". The US FASB has recently tentatively decided to defer for one year the effective date of its new revenue standard (ASU 2014-09 Revenue from Contracts with Customers) for public and nonpublic entities reporting under US GAAP. The IASB staff had also pointed out that the IASB is considering proposing some limited clarifying amendments to IFRS 15, so a degree of uncertainty regarding what IFRS 15 will finally look like that cannot be completely removed until the IASB decides to either finalise, or not proceed with, these amendments. The staff also mentioned that even if these clarifying amendments have a different effective date than the standard itself, many entities might to wish to apply the amendments at the same time as they first apply IFRS 15 to avoid repeated changes of their accounting methods.

The IASB granted these points and decided to propose to defer the effective date of IFRS 15 by one year to 1 January 2018. The IASB staff has been asked to prepare an exposure draft to this effect, which will be a stand-alone exposure draft only dealing with the effective date so it can be processed more quickly. The exposure draft will have a comment period of no less than 30 days and is expected to be issued in May 2015.

EFRAG's recommendation to the European Commission to adopt IFRS 15 without deferral of the effective date is not negatively affected by today's decision of the IASB as EFRAG recommends adoption of IFRS 15 in the European Union "with the effective date set by the IASB".

Please see also our observer notes from the meeting,  Need to know newsletter on the IASB's tentative decision and the IASB's corresponding press release.

Ms Lloyd began by stating the reasons why IFRS 9 is an improvement over IAS 39, such as combining all aspects of financial instruments accounting into one standard and enhanced disclosures. Next, she describes the loan model under IFRS 9 which requires “financial institutions and other companies to estimate and account for expected credit losses from when they first lend money or invest in a financial instrument.” She notes that although the IASB and FASB have worked together to create a converged model, the FASB has taken a different approach. Lastly, she comments that the implementation of the expected loss model for loan loss provisions will require significant changes to financial institutions and other companies' systems and processes, which is the reason why the IASB set the mandatory effective date to 1 January 2018.

For more in­for­ma­tion, see the report on the IASB’s website.

 Topics discussed at the meeting included:

• Forecasts of future economic conditions.
• Loan commitments — scope.
• Expected credit losses — measurement date.
• Assessment of significant increase in credit risk for guaranteed debt instruments.
• The maximum period to consider when measuring expected credit losses.
• Revolving credit facilities.
• Measurement of expected credit losses for an issued financial guarantee contract.
• Measurement of expected credit losses in respect of a modified financial asset.

For more information, and a summary of the discussions at the meeting, see the meeting summary on the IASB's website.