EFRAG draft comment letter on the IASB’s proposed amendments to classification and measurement of financial instruments
05 May, 2023
The EFRAG has issued a draft comment letter on the IASB’s proposed amendments to the classification and measurement of financial instruments. Overall, the EFRAG welcomes the IASB’s proposed amendments, particularly the clarifications to the general solely payments of principal and interest (SPPI) requirements, which the EFRAG says would provide a good basis for evaluating whether contractual cash flows of financial assets with ESG-linked or similar features meet SPPI requirements.
The EFRAG is urging the IASB to prioritise the publication of the proposed clarifications to SPPI requirements, given the increasing number of financial assets with ESG-linked features in Europe. However, the EFRAG suggests amending the proposed amendments in certain areas, such as adding a requirement to disclosure the policy used by an entity to recognise and derecognise cash. EFRAG also suggests that the IASB provides additional examples to better illustrate the concepts underlying the amendments and address potential application questions.
Comments on the EFRAG’s draft comment letter are request by 30 June 2023. For more information, see the press release and draft comment letter on the EFRAG’s website.
