EFRAG issued its final comment letter on the IFRS Interpretations Committee Draft Interpretation on 'Levies Charged by Public Authorities on Entities that Operate in a Specific Market'. EFRAG encouraged the Committee to assist the IASB in addressing the accounting for payments to public authorities.
EFRAG acknowledges that the IASB received requests for guidance on the accounting for levies in the financial statements of the entity paying the levy and that subsequent outreach activities identified that there is diversity in practice in how entities account for the obligation to pay levies in a number of situations and the issue is widespread. However, EFRAG thinks that, before issuing any guidance on the topic, further consideration is needed to ensure that relevant information is provided to users.
In general, EFRAG acknowledges that the consensus is consistent with the principles in the Conceptual Framework and IAS 37. However, EFRAG is concerned that the consensus reached by the IFRS Interpretations Committee would not always reflect the economic substance of the levy, and not result in information aligned with users’ needs, particularly in interim financial statements. Consequently, EFRAG encourages the IFRS Interpretations Committee to assist the IASB in addressing the accounting for payments to public authorities in a comprehensive way by taking into account the specific characteristics of such payments (e.g. non-exchange transactions) and the current requirements in IAS 12. The outcome should assist the decision on how to amend existing IFRS in order to provide more useful information to users in annual and interim financial reports.
Press release
© EFRAG - European Financial Reporting Advisory Group
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