16/10/2019 - EFRAG ENDORSEMENT ADVICE ON INTEREST RATE BENCHMARK REFORM (THE AMENDMENTS TO IFRS 9, IAS 39 AND IFRS 7)

​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 will become effective for the annual periods beginning on or after 1 January 2020, with earlier application permitted.

EFRAG has submitted its Endorsement Advice relating to Interest Rate Benchmark Reform (the Amendments to IFRS 9, IAS 39 and IFRS 7)  for use in the European Union and European Economic Area. EFRAG assesses that the Amendments meet all technical endorsement criteria of the IAS Regulation and are conducive to the European public good. It therefore recommends endorsement of the Amendments. EFRAG's recommendation is explained in the letter to the European Commission and the accompanying appendices.

The Endorsement Advice letter to the European Commission can be found below. 

EFRAG's Final Endorsement Advice on IBOR Reform - Letter to the EC.pdf

EFRAG has also updated its Endorsement Status Report, which can be downloaded here.