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IFRS 17 endorsement in the EU takes next hurdle

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19 Jul 2021

On 16 July 2021, the Accounting Regulatory Committee (ARC) voted in favour of endorsing IFRS 17 'Insurance Contracts' (including the amendments to IFRS 17 issued in June 2020) for use in the European Union. Final endorsement is currently expected in the fourth quarter of 2021.

In its final endorsement advice on IFRS 17, the European Financial Reporting Advisory Group (EFRAG) noted that it could not reach consensus on one aspect of the standard: the requirement to apply annual cohorts to intergenerationally-mutualised and cash-flow matched contracts. Seven EFRAG Board members believed that the annual cohorts requirement meets the EU endorsement criteria, whereas seven EFRAG Board members believed it does not, and two EFRAG Board members abstained.

While the final meeting document is not yet available in the EU Comitology register and the positive vote is only reflected in the updated EFRAG status report, it was expected that the ARC would include in the final vote an optional exemption from applying the annual cohort requirement (while disclosing the fact when doing so). Such an exemption had been suggested by some EFRAG stakeholders. Companies wishing to apply IFRS 17 as issued by the IASB would still be able to do so.

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