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EFRAG draft comment letter on IBOR ED

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

23 Apr 2020

The European Financial Reporting Advisory Group (EFRAG) has published a draft comment letter on the IASB exposure draft ED/2020/1 'Interest Rate Benchmark Reform — Phase 2 (Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)'.

In the draft comment lettert, EFRAG welcomes the tentative decisions taken by the IASB during its deliberations on the second phase of its project on the IBOR reform. In particular, EFRAG supports providing a practical expedient allowing an entity to apply paragraph B.5.4.5 of IFRS 9 Financial Instruments to account for modifications related to IBOR reform; supports the tentative decisions taken on hedge accounting; and observes that the proposed disclosures will assist users of financial statements in understanding the effects of IBOR reform on an entity.

​EFRAG notes the IASB proposal to clarify that a change in the basis on which the contractual cash flows are determined after initial recognition of financial instrument constitutes a modification even if the​ contractual terms of that financial instrument are not amended. As an assessment of the impact of this clarification is not possible within the limited timeframe available for this urgent project, EFRAG agrees with this proposal provided that this new definition is limited to the changes directly related to the IBOR reform.

Comments on EFRAG's draft comment letter are requested by 15 May 2020. For more information, see the press release and the draft comment letter on the EFRAG's website.

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