In November 2009, the IASB published the ED Financial Instruments: Amortised Cost and Impairment. The proposals in this exposure draft constitute the second phase of the comprehensive revision of IAS 39, and, along with phase three on hedge accounting, will form part of IFRS 9.
The ED proposes measurement, presentation and disclosure principles aimed at providing information about the effective return on financial assets and financial liabilities held at amortised cost. The proposals provide that amortised cost measurement is based on an expected cash flow approach that incorporates expectations about future credit losses. Limited application guidance including some practical expedients supplements these principles.
Based on its initial analysis EFRAG is cautiously supportive of the proposals from a conceptual perspective, although it has some significant concerns. EFRAG is yet to consider the operational implications of the proposals.
As a result this draft comment letter reflects EFRAG’s analysis of the proposals in the ED to date. The analysis will continue as EFRAG explores the operational implications of the proposals. In this regard, EFRAG seeks input from constituents, and will monitor the discussions of the IASB Expert Advisory Panel. We welcome any initial comments constituents may have, and would encourage them to engage with us in their debates about the proposals.
EFRAG will finalise its position based on its further analysis and on the input from constituents that it receives to this draft comment letter.
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