IFRS 7 Financial Instruments: Disclosures includes the disclosure requirements regarding financial instruments and the risks related to those instruments. The Amendments aim to improve the quality of disclosures about financial assets that had been transferred to third parties but:

(a) remained on an entity’s balance sheet because the derecognition rules of IAS 39 Financial Instruments: Recognition and Measurement did not allow their derecognition; or

(b) an entity derecognised the financial assets but retained some form of continued exposure that was no longer captured by the balance sheet after derecognising these assets.

The Amendments aim to help users of financial statements better evaluate the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position. Their objective is to promote transparency in the reporting of transfer transactions, particularly those that involve securitisation of financial assets.

EFRAG has issued its Endorsement Advice Letter and Effects Study Report relating to the endorsement of the Amendments for use in the European Union and European Economic Area. EFRAG supports the Amendments and has concluded that they meet the requirements of endorsement. EFRAG has also concluded that the benefits of the Amendments outweigh the costs.

Press release