On 20 September 2024, EFRAG published its draft comment letter (DCL) on the IASB’s Exposure Draft IASB/ED/2024/5 Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures.
EFRAG supports the IASB’s approach to updating IFRS 19 Subsidiaries without Public Accountability: Disclosures, including the decisions taken on whether and how to reduce the new and amended disclosures proposed in the IFRS Accounting Standards issued between February 2021 and May 2024. The changes addressed in the exposure draft relate to the aspects of: Presentation and disclosure in financial statements, Supplier finance arrangements, International tax reform – Pillar Two model rules, Lack of exchangeability, Financial instruments classification and measurement, and potential reduction of disclosures for the prospective Regulatory Assets and Regulatory Liabilities standard.
The EFRAG Draft Comment Letter does not specifically address fiduciary issues.
However, it acknowledges the potential impact on insurance groups, particularly in relation to disclosure requirements for financial instruments and the voluntary application of IFRS 19.
¾ EFRAG agrees with the IASB’s proposal not to reduce the disclosure requirements related to financial instruments with contractual terms that could change the amount of contractual cash flows as a result of a contingent event (amendments to IFRS 7). This information is considered useful for users of financial statements, including those of eligible subsidiaries in the insurance sector.
¾ The letter mentions that some members of the insurance sector indicated that insurance companies might still be impacted by the disclosure requirements in IFRS 19 if they do not meet the IASB’s definition of public accountability. While IFRS 19 does not propose reductions to the disclosure requirements in IFRS 17 Insurance Contracts, insurance companies could benefit from reduced disclosures for other IFRS Accounting Standards. IFRS 19 is applied voluntarily, allowing eligible subsidiaries to choose whether to apply the standard or not.
EFRAG notes that the timing for the finalisation of the amendments to IFRS 19 is important. EFRAG suggests that the publication of the amendments would be most helpful if completed before the implementation process of IFRS 19 starts, so that preparers wishing to apply IFRS 19 would welcome the opportunity to implement updated IFRS 19 disclosure requirements without having to make further changes to their reporting processes and systems. EFRAG also observes that the ED does not include an effective date and transition requirements for the proposed amendments to IFRS 19 requirements.
Feedback on EFRAG’s draft comment letter (“DCL”) is open until 13 November 2024.
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