The International Accounting Standards Board (IASB) has issued a narrow-scope amendment to the transition requirements in IFRS 17 Insurance Contracts, providing insurers with an option aimed at improving the usefulness of information to investors on initial application of the new Standard.
Initial Application of IFRS 17 and IFRS 9— Comparative Information.pdf
The amendment relates to insurers’ transition to the new Standard only―it does not affect any other requirements in IFRS 17.
IFRS 17 and IFRS 9 Financial Instruments have different transition requirements. For some insurers, these differences can cause temporary accounting mismatches between financial assets and insurance contract liabilities in the comparative information they present in their financial statements when applying IFRS 17 and IFRS 9 for the first time. The amendment will help insurers to avoid these temporary accounting mismatches and, therefore, will improve the usefulness of comparative information for investors. It does this by providing insurers with an option for the presentation of comparative information about financial assets.
IFRS 17, including this amendment, is effective for annual reporting periods starting on or after 1 January 2023.
28/12/2021 – EFRAG seeks comments on its Draft Endorsement Advice on Initial Application of IFRS 17 and IFRS 9 – Comparative Information (Amendment to IFRS 17)
EFRAG is consulting on both its assessment of Initial Application of IFRS 17 and IFRS 9 – Comparative Information (Amendment to IFRS 17) (‘the Amendment’) against the technical criteria in the EU and on its assessment of whether the Amendments are conducive to the European public good. Comments are requested by 19 January 2022EFRAG has issued a draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of the Amendment.
The narrow-scope Amendment addresses an important issue related to accounting mismatches between insurance contract liabilities and financial assets arising in the comparative information presented on initial application of IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments. The Amendment relates only to the presentation of comparative information. The Amendments become effective on initial application of IFRS 17.EFRAG’s overall preliminary assessment is that the Amendment satisfies the criteria for endorsement for use in the EU and therefore recommends its endorsement. EFRAG is seeking comments on all aspects of its analyses supporting its preliminary conclusions.
The Endorsement Advice Letter to the EC can be found here.