27/05/2020 - EFRAG has published its Final Comment Letter in response to the IASB's ED Interest Rate Benchmark Reform – Phase 2
EFRAG has published its Final Comment Letter in response to the IASB's Exposure Draft ED/2020/1 Interest Rate Benchmark Reform – Phase 2 (proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
On 9 April 2020, the IASB issued the Exposure Draft ED/2020/1 Interest Rate Benchmark Reform (proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) (the 'proposed amendments'). EFRAG has published its Final Comment Letter in response to this exposure draft on 26 May 2020.
EFRAG generally supports the proposed amendments in the ED, as it will enable entities to reflect the effects from transitioning from IBOR to alternative benchmark rates without giving rise to accounting impacts that would not provide useful information to users of financial statements.
EFRAG concurs to limit the scope of the new definition of a modification to the changes solely related to ibor reform. EFRAG also agrees with providing a practical expedient to account for such modifications and considers that this would provide more useful information to users of financial statements and is also expected to significantly reduce the operational burden on preparers.
EFRAG has reservations on the proposed disclosures, in particular the disclosure requirements based on carrying amounts, as they may be perceived as unbalanced in terms of cost/benefit in practice. EFRAG suggests to allow alternatively disclosing quantitative information used by entities in managing the reform. In addition, the disclosures in paragraph 24J(b) of IFRS 7 should not require comparative information.
EFRAG also proposes several drafting and other clarifications to the final standard.
The Final Comment Letter to the IASB can be found here.
