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IFRS 9 — Limited amendments (classification and measurement)

Date recorded:

Yulia Feygina (Staff) reviewed briefly the principal proposals in the IASB’s exposure draft on limited amendments to IFRS 9, and initial feedback and outreach statistics.  There was a user-focused online survey on establishing the ‘Fair Value through Other Comprehensive Income’ (FVTOCI) category.

  • The staff noted that nearly all respondents welcomed the proposals and agreed ‘modified economic relationship’ can be solely principal and interest.  However, there were questions about proposed application guidance, some concerns about regulated interest rates, and some comments on topics outside the scope of the proposals
  • On establishing the FVTOCI category, views were evenly split between the FVOCI category as proposed, some variation of the proposed category, and some who did not support establishing the category at all
  • Some constituents questioned whether ‘holding to collect principal and interest’ was a business model
  • Nearly all supported early application of just ‘own credit’ requirements, whilst requesting that this particular amendment be available before IFRS 9 is completed by incorporating it into IAS 39 or IFRS 9 (2010)
  • Many respondents noted that the proposals increased complexity, with some noting that such additional complexity was justified, while others stated it contradicted the original objective of IFRS 9, i.e. reducing complexity
  • The IASB and FASB are conducting joint redeliberations in July 2013, with the aim to complete redeliberations by the end of 2013.

A Council member, speaking on behalf of the North American life insurance industry, asked for a coordination of effective dates of IFRS 9 and the insurance contracts project, so that both sides of an insurance company’s balance sheet could transition to IFRS at the same time.  (Another Council member from the EU supported these comments.)

The EFRAG Chairman asked how such issues as ‘own credit risk’ and transition issues would be prioritised.

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