The European Financial Reporting Advisory Group (EFRAG) has formally endorsed the International Accounting Standards Board (IASB) amendments to International Financial Reporting Standard (IFRS) 4, Insurance Contracts, issued in September 2016, for use across European Union (EU) member states. The IASB issued the amendments, Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments), to address concerns arising from implementing IFRS 9, Financial Instruments, before the replacement insurance contracts standard. These concerns include temporary volatility in reported results.
EFRAG’s assessment is that, under the specific circumstances arising from the misalignment of effective dates of IFRS 9 and the replacement insurance contracts standard, the Amendments meet all technical endorsement criteria of the IAS Regulation. EFRAG has also concluded that the Amendments take account of the main concerns of entities whose activities are predominantly related to insurance and that are the most significantly affected by the issues arising from the misalignment of the effective dates.
Although EFRAG generally believes that the Amendments address many of the concerns it previously raised in its IFRS 9 endorsement advice, it notes that these Amendments do not address the cost concerns of many entities undertaking insurance activities that are not predominantly insurers. EFRAG also could not exclude the possibility that the Amendments could create a competition issue, but believes it is not in a position to determine whether this possibility is material from an economic perspective.
The EFRAG endorsement advice letter is available on this link.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved.