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27 August 2015

EFRAG ready to send out qualified endorsement advice on IFRS 9


EFRAG continues to believe that IFRS 9 meets the technical endorsement criteria, would be conducive to the European public good and should be adopted for the use in the European Union.

However, EFRAG notes that the mismatch in timing of the future insurance contracts standard and IFRS 9 will lead to disruptions in the reporting by insurers making their financial reporting less understandable for users while increasing costs for preparers. EFRAG states that this mismatch in timing makes “a strong case for having the IASB defer the effective date of IFRS 9, so as to align it with the effective date of the future insurance contracts standard, albeit only for insurers and as an option”. EFRAG notes that the IASB has started investiga­ting various ap­proaches that would address the issue, including a deferral. However, as the IASB has just started on these explorations, EFRAG states that it is unable to assess whether these actions will mitigate the negative effects of the timing mismatch.

However, the IASB is at the early stages of its work and therefore we are not in a position today to assess whether their ini­tia­tive will remove the concerns created by the non-align­ment of the effective dates of IFRS 9 and the future insurance contracts standard.

EFRAG advises the European Commission to request the IASB to proceed with the necessary IFRS amend­ments as quickly as possible and notes that any solution (deferral or other) remains sub-op­ti­mal and should be of a very temporary nature.

EFRAG states in its endorsement advice that IFRS 9 should generally be adopted, however, does not include final advice on the insurance standard matter and therefore leaves open how the European Commission should react – go forward with endorsing IFRS 9 for all companies in the hope that the IASB will come up with a sustainable solution to the timing mismatch problem or the hope that IASB will defer the effective date of IFRS 9 for insurers or whether even an EU-only deferral should be chosen.

Full press release



© Deloitte LLP


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