EFRAG: Endorsement Advice on IFRS 9 Financial Instruments

15 September 2015

EFRAG has completed its due process regarding IFRS 9 Financial Instruments and has submitted its Endorsement Advice Letter to the EC. IFRS 9 replaces IAS 39 and provides a principle-based approach to the recognition and measurement of financial instruments.

EFRAG has submitted its Endorsement Advice relating to IFRS 9 for use in the EU and EEA. EFRAG assesses that the Amendments meet all technical endorsement criteria of the IAS Regulation. In respect of its conclusion on the European public good, the endorsement advice concludes “that overall IFRS 9 is conducive to the European public good, except for the impact on the insurance industry of applying IFRS 9 before the finalisation of the forthcoming insurance contracts standard. The IASB is working on one or more solutions for the insurance industry and is expected to make tentative decisions in the next two months. EFRAG will advise on its views as the IASB’s work develops and on that basis will provide further advice relevant for the insurance industry. In any event EFRAG recommends that all businesses other than those carrying out insurance activities are required to account for their financial instruments in compliance with IFRS 9 in 2018 and businesses carrying out insurance activities are permitted to do so in compliance with IFRS 9 from the same date”. EFRAG’s recommendation is explained in the letter to the EC and the accompanying appendices.

In EFRAG´s view, IFRS 9 will provide relevant, reliable, comparable and understandable financial information needed for making economic decisions and assessing the stewardship of management. EFRAG has considered and assessed that the use of fair value in IFRS 9 is appropriate and that IFRS 9 would lead to prudent accounting. EFRAG has therefore concluded that IFRS 9 would not be contrary to the true and fair view principle. This assessment has been carried out considering IFRS 9 on a stand-alone basis.

Press release

Endorsement advice letter

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