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European Parliament to vote on IFRS 9 resolution tomorrow

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05 Oct 2016

Yesterday, the plenary of the European Parliament debated a proposed resolution regarding IFRS 9 'Financial Instruments'. A vote on the resolution is scheduled for tomorrow.

The resolution was developed by the Parliament's Committee on Economic and Monetary Affairs (ECON) and relates to several questions submitted to the Commission, specifically, how the Commission intends to address concerns regarding potential negative effects of IFRS 9 on long-term investment, how the Commission intends to address the concerns caused by the misalignment of the effective dates of IFRS 9 and the new upcoming insurance standard (IFRS 17) and whether the Commission considers the provisions issued by the IASB on 12 September 2016 to be adequate and satisfactory for the EU, and how the Commission intends to address potential negative effects of IFRS 9 on financial stability.

In this context, the resolution contains several observations on IFRS 9 as well as calls on various parties to ensure that IFRS 9 contributes to the European public good. The following aspects deserve mentioning:

The European Parliament

  • notes that IFRS 9 constitutes one of the major responses of the IASB to the financial crisis and notes that implementation efforts are already in progress;
  • acknowledges that IFRS 9 constitutes an improvement on IAS 39;
  • notes that IFRS 9 calls for a great deal of judgement in the accounting process and calls for guidance to be developed by the European Supervisory Authorities in cooperation with the Commission and EFRAG in order to prevent any abuse of management discretion;
  • calls on the IASB and EFRAG to strengthen their impact analysis capacity, notably in the field of macroeconomics;
  • notes the misalignment of the effective dates of IFRS 9 and the upcoming new insurance standard IFRS 17 but also notes that the IASB has issued amendments to IFRS 4 addressing some of the concerns;
  • calls on the Commission to make sure that IFRS 9 serves the EU’s long-term investment strategy;
  • calls on the Commission to ensure compliance of IFRS 9 with the Accounting Directive and to cooperate wherever necessary with the IASB and national and third-country standard setters;
  • calls on the Commission, together with the European Supervisory Agencies (ESAs), the ECB, the European Systemic Risk Board (ESRB) and EFRAG, to closely monitor the implementation of IFRS 9 in the EU and to prepare an ex post impact assessment no later than June 2019; and
  • calls on the IASB to conduct a post-implementation review (PIR) of IFRS 9 in order to identify and assess unintended effects of the standard, in particular on long-term investment.

Resolutions not legally binding but will serve as guidance and reference in future EU law-making processes. Please click for the full text of the proposed resolution on the European Parliament website. (Note that you can choose your preferred language in the top right corner (translation is in progress).)

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