The FRC published its comment letter to the EFRAG regarding the draft IFRIC Interpretation, 'Levies Charged by Public Authorities on Entities that Operate in a Specific Market'.
The FRC does not agree with the EFRAG view that the consensus in the draft IFRIC interpretation will lead to decision useful information for users of financial statements. In particular, accounting for balance sheet based levies (e.g. UK bank levy) in accordance with this draft Interpretation will lead to counter-intuitive information presented to users at the interim date.
The FRC is concerned that accounting and reporting that diverges so significantly from the underlying substance of the transaction has the potential for bringing accounting into disrepute. As a result, the FRC recommends that rather than issuing this IFRIC in final form, the underlying principle in IAS 37 should be referred to the IASB for review.
The FRC does not have any comments on the scope of the interpretation and has not identified any other levies that should be within the scope of this interpretation.
Comment letter
© FRC
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