ESAs speak out against "top up" regarding IFRS 4 amendments
25 Jul 2017
The European Supervisory Authorities (ESAs) have jointly written to the European Parliament and the Council of the European Union to speak out against enlarging the amendments to IFRS 4 to include a "top up" that would allow a financial conglomerate to elect that none of its entities operating in the insurance sector apply IFRS 9 in the consolidated financial statements for financial years the commencement of which precedes 1 January 2021 where certain conditions are met.
The European Commission's Accounting Regulatory Committee (ARC) voted positively on including the "top up" in the endorsement of Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4) on 29 June and subsequently the European Commission sent the text to the European Parliament and the Council of the European Union.
Before the ARC vote, the ESAs had warned the ARC against the "top up" arguing that "it would lead to opportunities for accounting arbitrage, an un-level playing field and a breach of fundamental principles in accounting, and would ultimately result in a lower degree of investor protection". Given the ARC voted positively on the enlarged text, the ESAs have now turned to the Parliament and the Council to once more stress their position.
Please click for the following additional information:
- Full text including "top up" that the Commission sent to the Parliament and the Council
- Letter sent to the Parliament / the Council (identical in wording) by the ESAs
- Points raised vis-à-vis ARC that were sent as an annex to the letters to the Parliament and the Council
