Amendments to the Classification and Measurement of Financial Instruments

In May 2022, as a result of post-implementation review of classification and measurement requirements of IFRS 9 ('PIR'), the IASB decided to add to its agenda a standard-setting project to make narrow scope amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures.

In March 2023, the IASB published the Exposure Draft Amendments to the Classification and Measurement of Financial Instruments ('the ED') to address issues identified during the PIR and in a request to the IFRS IC. The ED proposed the following amendments to IFRS 9: 

• derecognition of a financial liability settled through electronic transfer;

• assessing the contractual cash flow characteristics of financial assets, including:

• financial instruments with ESG-linked features;

• financial assets with non-recourse features;

• contractually linked instruments.

The ED also proposed to make amendments to the disclosure requirements in IFRS 7 for:

• investments in equity instruments designated at FVOCI; and

• financial instruments with contractual terms that could change the timing or amount of contractual cash flows on the occurrence (or non-occurrence) of a contingent event that is specific to the debtor.

EFRAG published its comment letter in response to the IASB ED on 19 July 2023 where it welcomed the IASB's efforts to address stakeholders' concerns and, in general, agreed with the proposed amendments. EFRAG also pointed out that a solution for financial assets with ESG-linked or similar features is expeditiously needed, raised some concerns and provided suggestions.

EFRAG's Comment Letter can be found here.

The IASB redeliberated stakeholders' feedback from October 2023 to February 2024 and published the Amendments to Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) on 30 May 2024.

The European Commission issued a letter requesting advice on the endorsement of the Amendments on 30 May 2024. The letter contained a standard request for advice on the endorsement that does not identify specific issues or areas to investigate.

EFRAG published its draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of the Amendments on 27 June 2024 with a consultation period ending on 13 September 2024.

After considering the feedback received to its public consultation, EFRAG issued its Final Endorsement Advice on 9 October 2024 confirming the initial assessment that the Amendments satisfied the criteria for endorsement for use in the EU and therefore EFRAG recommended their endorsement.