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EFRAG sees a need for some rewording and disagrees with several areas of the IASB exposure draft.
EFRAG also strongly disagrees with the approach that several of the proposals involve making changes to the requirements to IFRS through changes only to the Bases for Conclusions or to non-mandatory parts of standards.
The range of amendments made through the Annual Improvements process should be more limited and recommends that the IASB should set some explicit limitations on the issues it addresses in the Annual Improvements project.
Main areas of disagreement are:
Ø Issue 3: IFRS 8 Operating Segments – Disclosures of information about Segment Assets. The IASB proposes to amend the basis for conclusion so that only those assets and liabilities that are included in the measure of the segment‘s assets and segment‘s liabilities that are used by the chief operating decision maker shall be reported for that segment. EFRAG is particularly concerned at the suggestion that this objective should be achieved by changing only the Basis for Conclusions.
Ø Issue 8: IAS 38 Intangible Assets – Measuring the fair value of an intangible asset acquired in a business combination. The IASB proposes to amend the description of valuation techniques commonly used by entities when measuring the fair value of intangible assets acquired in a business combination that are not traded in active markets. EFRAG believes these proposed amendments attempt to clarify something that is already clear. We believe that, if IFRS are to remain high-level, principle-based standards, it is important that clarifications‘ of this kind are not made.
Ø Issue 12: IAS 39 Financial Instruments – Recognition and Measurement – Bifurcation of an embedded foreign currency derivative. The IASB is proposing to replace the notion of a commonly used currency in IAS 39.AG33(d) by a reference to the characteristics of a functional currency as set out in paragraph 9 of IAS 21 The effects of Changes in Foreign Exchange Rates. The intention in doing this is to clarify which currencies could be considered ―commonly used in a particular economic environment (and therefore would be treated as embedded derivatives that are closely related to the host contract). We do not support the proposed amendments because we do not think they result in greater clarity.