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Insurance Europe believes that the current IAS 1 may have been interpreted too strictly and therefore, in its opinion, the amendments should enable entities to use greater judgement on which information can result in improvements to the relevance of disclosures in the notes to the financial statements.
Insurance Europe is also supportive of the IASB focus on assessing the existing guidance on materiality in a short-term project. Additional education on application could be useful, especially for preparers of financial statements, which are frequently burdened both in day-to-day operations and financially due to a too strict interpretation, leading often to a compliance check-list approach.
Furthermore, Insurance Europe believes the IASB identification that an entity does not have to provide immaterial information (IAS 1 paragraph 31) is the appropriate approach. Insurance Europe understands that some constituents might prefer to introduce an explicit requirement to prevent the disclosure of such information. However, Insurance Europe is convinced that such a change to the IASB proposal could lead to unintended consequences with regard to practicability. For example, it could lead to lengthy debates with auditors in which companies would have to defend their every disclosure. Instead, Insurance Europe believes that the possible IASB application guidance, as a result of a short-term project, is more suitable for assessing the use of materiality overall.
However, Insurance Europe would like the IASB to clarify that the requirement in paragraph 1.115 to cross-reference each item presented in the statement of financial position covers only the cases in which information is provided in the notes as practicable and should not be read as a requirement to include information in the notes for each of the items in the statement of financial position.
In addition, Insurance Europe agrees with a comment in the IASB feedback statement (December 2012) regarding its Agenda Consultation that “the disclosure process is affected by the enforcement environment”. Insurance Europe therefore encourages the IASB to create sufficient awareness among other stakeholders and other interested parties of the proposals on the application of the amendments. It is essential that appropriate implementation steps are taken to avoid unnecessary disclosure burden. Insurance Europe believes that the IASB has to take a leading role in this process by clearly setting the objectives of disclosure and presentation requirements in IFRS financial statements. European insurers, as part of a highly regulated industry, are committed to accompanying the IASB in the future steps of the Disclosure Initiative project.
Finally, Insurance Europe thinks that some proposed disclosure requirements for ongoing projects, for example IFRS 4 Phase II, need to be reconsidered as unreasonable and thus contradicting the objective of making disclosures more effective. Insurance Europe proposes that the insurance contracts project is a good opportunity to implement the objectives of the disclosure initiative in line with the objective of the newly proposed amendments to IAS 1.