• The national standard setter (and/or another suitable public body) in a country seeking equivalent status should assess whether that country's required disclosures, measurement and recognition principles, and financial statement presentation are materially the same as IFRSs and where they are not, assess the differences.
• If there are no significant differences between the third country GAAP and IFRSs, such GAAP may be deemed equivalent without the need for additional rectification disclosures.
• Even if significant differences exist, the third country GAAP may be considered equivalent to IFRSs if those differences identified can be rectified at company level by non-complex disclosures. Those additional non-complex disclosures should be subject to audit.
• Prior to giving any advice to the Commission on whether to accept an equivalence assessment, CESR would seek reactions from market users regarding the third country GAAP and the proposed rectifications via public consultation.
• Once all other steps have been fulfilled, and using the definition of equivalence CESR has already provided, an 'overall' assessment of equivalence should be made in the final instance by the European Commission via a comitology process.
• For the purposes of establishing equivalence, CESR assumes that third country GAAPs are properly applied including the provision of any rectifying disclosures necessary. CESR further assumes that the necessary filters for ensuring market confidence are in place for third country issuers using or participating in the EU capital markets.
• Finally, CESR considers that an assessment of the reliability of the audit conducted on the financial statements of issuers using an equivalent GAAP should be a step in the mechanism.

• Question 1: Please indicate whether you submitted comments to IASB and/or EFRAG during their consultations.
• Question 2:
  • a) Do you think information prepared under the management approach on which IFRS 8 is based is more relevant, reliable, comparable, understandable and useful than information prepared under IAS 14?
  • b) Do you think that information prepared under the management approach improves the true and fair representation of business activities?
  • c) Are you of the opinion that segment information based on the management approach provides greater accuracy for measuring individual segments and ultimately results in greater forecast precision than segment information based on IAS 14?
• Question 3:
  • a) Do you assess that cost for preparation of information is lower under IFRS 8 than under IAS 14?
  • b) Do you think that the cost/benefit balance of replacing IAS 14 by IFRS 8 is positive (e.g. lower cost outweighing the potentially lower quality of information provided or potentially higher quality of information provided outweighing higher cost)?
• Question 4: Do you consider that the principles on which IFRS 8 is based, in particular the fact that information for segment reports should be prepared through the eyes of the 'chief operating decision maker', would pose problems on established EU practices, e.g. in the area of corporate governance?
• Question 5: Do you agree with the argument that IFRS 8 requires smaller listed companies to report a segment by segment analysis of their business including commercial sensitive information with the effect that competitiveness of smaller listed companies in the EU will be harmed? Please provide reasons for your view and indicate how far that constitutes a change compared to the requirements of IAS 14.
• Question 6:
  • a) Do you believe that the lack of mandatory requirements for full segment information on a geographical basis in IFRS 8 gives sufficient reason for a non-endorsement decision?
  • b) Do you believe that other mandatory requirements for segment information are missing in IFRS 8 (compared to IAS 14)? If yes, which ones?
• Question 7: Can you provide any information that has been generated by field studies, research work, internal analysis carried out in your organisation, jurisdiction?
• Question 8: If you have any further comments on this consultation please provide them to us .

Key Implications of the Insurance DP and Issues for Consideration:

• the application of discounting for insurance cash flows (including non-life liabilities) and the selection of the related discount rates;
• the requirement to consider all possible cash flows in deriving probability weighted expected mean average cash flows;
• development of industry market practice for the determination of market consistent risk margins and service margins;
• whether an overall insurer's risk margin should take into account portfolio diversification;
• the risk and service margins established at inception may, in certain circumstances, allow an insurer to report a profit or loss on inception of the insurance business;
• the volatility of insurer liabilities and the resultant profits and losses that will arise as market consistent discount rates and estimates of risk and service margin change after inception;
• the subjectivity of many of the estimates required and the likely range of acceptable estimates will present challenges for directors and auditors in determining the appropriateness of the overall estimates for insurance liabilities;
• detailed disclosure of the assumptions and methodologies used to calculate risk and service margins will be crucial to the effect of market disclosure in promoting the development of established industry practice for the consistent estimation of these margins;
• whether accounting differences between the CEV proposals and the IAS 18 requirements for investment contracts should be eliminated and if not, whether the increased cost and complexity of unbundling insurance and investment contracts would be justified;
• whether the CEV should reflect the credit characteristics of the insurer or be estimated on a consistent basis by all insurers;
• convergence of accounting, regulatory, pricing and risk management modelling of insurance liabilities so that the basic modelling techniques can be embedded within the business and deliver consistency of reporting and measurement;
• introducing new accounting systems to determine CEV will be costly but they will be likely to be more cost effective if they can be utilised throughout the business, not just for financial reporting; and
• the need for insurers to educate users of financial statements on the implications of applying this new reporting model to their particular business.