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25/06/2020 - EFRAG requests comments on its Draft Endorsement Advice on Annual Improvements to IFRS Standards 2018-2020

​EFRAG is consulting on both its assessment of Annual Improvements to IFRS Standards 2018-2020 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 7 September 2020.



​EFRAG has issued a Draft Endorsement Advice letter and a separate invitation to comment relating to the endorsement for use in the EU of Annual Improvements to IFRS Standards 2018-2020 ('the Amendments').

The objective of the Amendments is to:  

  • permit an entity that is a subsidiary, associate or joint venture, who becomes a first-time adopter later than its parent and elects to apply paragraph D16(a) of IFRS 1 First-time Adoption of International Financial Reporting Standards, to measure the cumulative translation differences using the amounts reported by the parent, based on the parent’s date of transition to IFRSs;

  • clarify that the reference to fees in the 10 per cent test includes only fees paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf;

  • remove the potential confusion regarding the treatment of lease incentives applying IFRS 16 Leases as was illustrated in Illustrative Example 13 accompanying IFRS 16; and

  • remove the requirement in paragraph 22 of IAS 41 Agriculture for entities to exclude cash flows for taxation when measuring fair value applying IAS 41.

Annual Improvements to IFRS Standards 2018-2020 includes an amendment to IFRS 16, which have not been endorsed in the EU. This consequential amendment is not addressed in this Draft Endorsement Advice as Regulation (EC) No 2017/1986 of the European Parliament and of the Council on the application of International Accounting Standards is limited to the main text of the standards as well as Appendix A (defined terms), Appendix B (application guide), Appendix C (transition) and Appendix D (amendments to other standards).

The Amendments become effective for annual periods beginning on or after 1 January 2022, 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 analyses supporting its preliminary conclusions.

Comments are requested by 7 September 2020. You can comment on EFRAG’s Draft Endorsement Advice by clicking on the ‘Comment publication’ link below.

The Draft Endorsement Advice can be found here and the invitation to comment here.

EFRAG has also updated its Endorsement Status Report, which can be downloaded here​ on EFRAG's web page.