ACCOUNTING

IASB: Majority of Stakeholders Negative on More Changes to IFRS 9

The comment deadline on the International Accounting and Standard Board’s exposure draft to amend IFRS 9: Financial Instruments has ended, and it seems stakeholders are not very happy with the proposals, for different reasons.

According to the IASB, the naysayers can be categorized into three groups.

Those who believe that there never was an issue with IFRS 9. Among these is the German standard-setter ASCG, which states: "Generally speaking, a majority of our Committee members is of the view that IFRS 9 would not have required any changes.”

“These members do not share the view that IFRS 9.B4.1.11(b) excludes financial instruments with symmetric prepayment features comprising potentially ‘negative’ compensation."

The South African Institute of Chartered Accountants (SAICA) joins the statement: "We do not believe an exception is required for this but merely a clarification or additional guidance."

And the South Korean standard-setter KASB adds: "Concerns have been raised about whether those suggested cases are common and widespread enough to require an amendment."

Those who believe that changes to IFRS 9 are needed, but the approach is wrong/might have unintended consequences. The French standard-setter ANC notes: "ANC is still convinced that an alternative solution, i.e. clarification, is worth being contemplated in order to provide a simpler and also immediately applicable solution."

The UK standard-setter FRC notes a "not convincing" rationale regarding the exclusion of financial asset where the fair value of the prepayment feature is not insignificant.

And the Institute of Chartered Accountants in England and Wales (ICAEW) states: "We are not, however, supportive of the IASB’s proposed solution, which is overly complex, introduces unwelcome asymmetry and could result in unintended consequences."

Deloitte joins the group of skeptical voices and raises "concerns with the way the amendment is structured and drafted."

Those who believe that changes to IFRS 9 might be warranted, but the timing is wrong. The Japanese standard-setter ASBJ is "gravely concerned" regarding the comment period of 30 days, and believes that with the effective date of IFRS 9 approaching any amendment to IFRSs should be very limited in scope.

And the European Securities and Markets Authority (ESMA) notes that it "has serious concerns about [the] purpose and timing" of the proposed amendments and would consequently suggest "that the IASB better articulates why it decided to propose these amendments at this particular point in time, as the mandatory application of IFRS 9 is just a few months away."

The Canadian standard-setter AcSB adds: "We are also very concerned that modifying IFRS 9 within a few months before the effective date can negatively affect the implementation efforts of preparers, auditors and users of the financial statements."

EFRAG, the European Financial Reporting Advisory Group, notes that the timing problems can be mitigated to a certain degree by a different effective date.

"EFRAG recommends that the IASB change the effective date to 1 January 2019, with early application permitted, rather than the date proposed in the Amendments. This is in order to provide more time for Europe's and other jurisdictions' translation and/or endorsement processes and to address the concerns of SEC-filers."

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