22/12/2022 - EFRAG seeks comments on its draft endorsement advice on amendments to IAS 1
EFRAG is consulting on its assessment of the Amendments to IAS 1 Presentation of Financial Statements against the technical criteria for use in the EU and on its assessment of whether the Amendments are conducive to the European public good. Comments are requested by 1 March 2023.
EFRAG has issued a draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of Classification of Liabilities as Current or Non-current (January 2020), the Classification of Liabilities as Current or Non-current - Deferral of Effective Date (July 2020) and the Presentation of Financial Statements: Non-current Liabilities with Covenants (October 2022) (Amendments to IAS 1) (‘the Amendments’) against the technical criteria in the EU and on its assessment of whether the Amendments are conducive to the European public good.
The objective of the Amendments is to clarify the principles in IAS 1 Presentation of Financial Statements for the classification of liabilities as either current or non-current. The Amendments clarify the notion of settlement, that management intent does not affect current or non-current classification, that options by the counterparty that could result in settlement by the transfer of the entity’s own equity instruments do not affect current or non-current classification, specify how an entity classifies a liability arising from a loan arrangement with covenants as current or non-current, and regulate the disclosures to be provided when an entity has loan arrangements with covenants that could require the loan arrangement to become payable within twelve months after the reporting period.
The Amendments shall be applied retrospectively for annual periods beginning on or after January 2024, 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 recommends its endorsement. EFRAG is seeking comments on all aspects of its analysis supporting its preliminary conclusions.
EFRAG's draft endorsement advice letter is available here.
You are asked to provide your comments on the draft endorsement advice letter by downloading the invitation to comment (here), filling in the comments and submitting the response by clicking on the ‘Comment publication’ link below
Comments are requested by 1 March 2023.
For your information, EFRAG has also updated its Endorsement Status Report, which is available here.
