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EFRAG underlines the different information needs of capital market participants with regard to the relationship between general purpose financial reporting and prudential reporting. EFRAG notes that it is fundamentally important to recognise that those different information needs mean different financial reporting objectives, and that could mean different reporting.
There is also evidence that existing accounting practices could be pro-cyclical, EFRAG notes and calls on the IASB and the FASB to look carefully at the causes. EFRAG is of the opinion that these result in the area of fair value measures and loan loss provisioning. Therefore, disclosure of off-balance sheet risk and whether such risks should remain off-balance sheet are other important areas that need to be investigated carefully, EFRAG notes.
The full response is attached below.