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In the IFRIC Update of September 2012, the IFRS Interpretations Committee published a tentative rejection notice on IAS 39 Financial Instruments: Recognition and Measurement, Negative interest rates: implications for presentation in the statement of comprehensive income.
EFRAG has decided to comment on this proposal, as it observed that the IFRS Interpretations Committee conclusion that “the expense arising on a financial asset because of a negative effective interest rate should not be presented as interest revenue or interest expense, but in some other appropriate expense classification” is interpretative in nature, as it is currently not an explicit requirement.
In EFRAG's view, the wording for rejection used by the Committee in its publication of the ‘IFRIC Update’ to explain the agenda rejection is in itself akin to an interpretation. EFRAG urges the IFRS Interpretations Committee not to issue any rejection notice that would be akin to an interpretation. While rejection notices have no authoritative status, in practice, regulators do refer to rejection notices in the exercise of their enforcement responsibilities. In Europe, ESMA considers rejection notices to be part of the IFRS literature that preparers should comply with.
Rejection notices cannot add or interpret the existing requirements, as they are not subject to a full due process, and also not subject to an endorsement process in the European Union.