24 January 2012

EFRAG expects to issue an invitation to comment on its initial assessments of IFRS 10, IFRS 11 and IFRS 12

EFRAG expects to approve an invitation to comment on its initial assessments of IFRS 10, IFRS 11, IFRS 12, IAS 27 (amended 2011) and IAS 28 (amended 2011) at a conference call meeting on 31 January 2011, and issue its assessments for public consulation with a comment period until 8 March, 2012.

EFRAG has finalised its discussions on its initial assessments of IFRS 10, IFRS 11, IFRS 12, IAS 27 (amended 2011) and IAS 28 (amended 2011) (the Standards) against the technical criteria for endorsement in the EU, and the costs and benefits that would arise from their implementation in the EU. EFRAG’s initial assessment is that the Standards meet the technical criteria to be adopted in the EU.

However, EFRAG has indicated that it would not support the effective date of IFRS 10, which is 1 January, 2013. EFRAG arrived at this tentative decision for two distinct reasons. Firstly, the results of the field-tests led by EFRAG confirmed that for some companies, mainly banks and insurers, the effective date of 1 January, 2013 leaves them insufficient time to develop a common understanding of how the principles in IFRS 10 should be applied in preparing meaningful and consistent financial reporting. Secondly, EFRAG noted that the IASB has recently issued the Exposure Draft 'Investment Entities' and the IASB Exposure Draft 'Transition Guidance (proposed amendments to IFRS 10)'. The amendments to IFRS 10 are only intended to clarify the transition provisions of that standard (less than a year before the standard becomes effective), while the Exposure Draft 'Investment Entities' creates uncertainty for constituents in the application of that standard and potentially unnecessary costs.

EFRAG has therefore prepared a draft recommendation that the effective date for IFRS 10 should be 1 January, 2014, with early application permitted. As EFRAG recommends that the Standards should be adopted at the same time, the deferral of the effective date is recommended to apply to all of the Standards.

Press release

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