26 February 2019, the European Parliament ECON committee held an exchange of views with Hans Hoogervorst, Chairman of the International Accounting Standards Board (IASB) and Erkki Liikanen, Chairman of the IFRS Foundation Trustees .
A full recording of the meeting is available on the EP website https://www.europarl.europa.eu/streaming/?event=20190226-0900-COMMITTEE-ECON
Summary
Erkki Liikanen, Chairman of the IFRS Foundation Trustees
- Reflected on the importance of IFRS and several strategic trends (threat of (de)globalisation, relevance, technology). With respect to relevance, he focused on the impact on other areas (eg ESG).
Hans Hoogervorst, Chairman of the IASB
- IFRS 17
- Focused on the urgency of IFRS 17 and the IASB considerations with respect to easing implementation.
- Hans noted that there was evidence from Korea and other countries that insurers were increasing capital buffers in preparation for IFRS 17.
- Noted that of the more than 20 areas identified, the IASB is willing to consider changes as long as the change is not disruptive to the implementation process.
- A slide was presented with the 6 issues identified by EFRAG, which showed that no change is foreseen for the level of aggregation.
- On timing, he noted that some insurers were happy with the IASB’s one-year delay.
- Sustainability
- On the IASB role in global reporting, sustainability issues can increasingly have a financial impact. To this end the IASB is planning an update of the Management commentary.
- Country-by-county reporting
- The IASB held discussions with the OECD and it was decided that the IASB will not engage but cooperate with OECD.
MEP Theodor Dumitru Stolojan (EPP, Ro)
- MEP Stolojan asked about the solutions the IASB is considering with respect to the issues raised for mutual entities.
- Hans Hoogervorst responded that he was not aware of the problem and will discuss further with the IASB staff.
- On ESG, MEP Stolojan noted that financial reporting should not be mixed with other, non financial reporting. He also asked about the IASB agenda regarding intangible assets (eg tech companies).
- Hans Hoogervorst stated that the IASB does not intend to be a standard setter for non-financial information, but environmental issues can become very financially relevant. There is an overlap between financial and sustainability reporting. The IASB is updating its guidelines (IFRS Practice Statement 1: Management Commentary).
MEP Pervenche Berčs (S&D, FR)
- MEP Bérčs urged the IASB to investigate the issue with IFRS 17 and mutual entities.
- On ESG, noted that as the EU is moving ahead quicker with its sustainability agenda, carve-ins to IFRS may be needed in future. She also pointed out that a carve-in may be needed amid concerns the EP had expressed on the impact of IFRS 9 on long term investments.
- Hans Hoogervorst did not consider that carve-ins would be needed with respect to sustainability, but if decided otherwise this would need to be addressed by legislation.
- On IFRS 9 and long-term investment, Hans suggested that the EP wait for the IASB to assess the issue before giving itself carve-in powers.
MEP Wolf Klinz (ALDE, DE)
- Asked about the effect of the fact that the US and China are not using IFRS on level of harmonisation.
- Asked whether standards can help with the issue of global digital companies and taxation. He noted that the EC was working on a “digital services tax”.
- Asked about the treatment of cryptocurrencies in IFRSs.