ESBG also reiterate its concern regarding the piecemeal approach adopted by the IASB. In order to fully assess the impact of a mixed measurement accounting model, it is necessary to form a view of the entire situation, including impairment rules and hedge accounting principles.
ESBG also reiterate its concern regarding the piecemeal approach adopted by the IASB. In order to fully assess the impact of a mixed measurement accounting model, it is necessary to form a view of the entire situation, including:
- the classification and measurement of liabilities (the current proposal only concerns the asset side but leaves the other half of the balance sheet – liabilities – aside, therefore asymmetrical rules for assets and liabilities are possible);
- impairment rules (Phase 2 is only at the consultation stage, the exposure draft on the expected cash flow approach to impairment might be amended); and
- hedge accounting principles (Phase 3, on which we are still expecting a draft proposal).
In addition, a possible “Phase 4” may be developed: the project to converge IFRS with US GAAP entails high uncertainty. IFRS 9 could later be completely re-assessed in the light of US GAAP.
ESBG also stresses that transitional arrangements should not be overly burdensome. Every effort should be made to facilitate a coherent and smooth implementation of the three (or four) IAS 39 revision phases. In this regard, we consider that the proposed changes to the measurement of financial instruments have to be synchronized. Therefore, a separate endorsement of the different phases is not acceptable. Furthermore, endorsing IFRS 9 - Phase 1 as such will not necessarily promote increased transparency. The endorsement will enable some banks to freely apply the new standard, while others will decide not to apply it. As a consequence, comparability between different banks will become more difficult as they may apply different accounting standards.
© European Savings Banks Group
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