30/09/2019 - EFRAG requests comments on its Draft Endorsement Advice on the Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)
EFRAG is consulting on both its assessment of the IASB's Exposure Draft ED/2019/1 Interest Rate Benchmark Reform (proposed Amendments to IFRS 9, IAS 39 and IFRS 7) (the Amendments) against the technical criteria in the EU and on its assessment of whether the Amendments are conducive to the European public good. Highlighting that the entire endorsement process is urgent in order to make the reliefs available for early adoption for the 2019 financial reporting, EFRAG requests your comments by 10 October 2019.
EFRAG has issued a draft endorsement advice letter and a separate invitation to comment on the IASB's Exposure Draft ED/2019/1 Interest Rate Benchmark Reform (proposed Amendments to IFRS 9, IAS 39 and IFRS 7) relating to the endorsement for use in the EU of the Amendments.
This consultation has been announced already with the issuance of a pre-consultation document on 20 September 2019, therefore the draft endorsement advice letter below overrides the pre-consultation document.
The Amendments relate to the issues affecting financial reporting in the periods before replacement of an existing interest rate benchmark with an alternative interest rate.
The Amendments provide relief from the highly probable and prospective assessments required by IFRS 9 and IAS 39 for hedging relationships that are affected by the uncertainties of the IBOR reform. With the same objective, the Amendments provide relief from the retrospective assessment under IAS 39. The exceptions described in the Amendments apply only to those hedging relationships directly affected by uncertainties of the IBOR reform including cross-currency interest rate swaps (for the interest component affected).
The Amendments become effective for annual periods beginning on or after 1 January 2020, with earlier application permitted.
EFRAG's overall preliminary assessment is that the Amendments satisfy the criteria for endorsement for use in the EU and therefore EFRAG recommends their endorsement.
EFRAG is seeking comments on all aspects of its analyses supporting its preliminary conclusions. EFRAG invites constituents to provide their comments as soon as possible, highlighting that the entire endorsement process is urgent in order to make the reliefs available for early adoption for the 2019 financial reporting.
EFRAG's draft endorsement advice letter is available here.
Comments to the draft endorsement advice are requested by 10 October 2019 COB.
You are asked to provide your comments by downloading the Invitation to Comment here, filling in the comments, and submitting the response by clicking on the 'Comment publication' link below.
