05/05/2023 - EFRAG draft comment letter on the IASB’s ED Amendments to the Classification and Measurement of Financial Instruments – proposed amendments to IFRS 9 and IFRS 7
EFRAG has published its Draft Comment Letter in response to the IASB's Exposure Draft 2023/2 Amendments to the Classification and Measurement of Financial Instruments (Proposed amendments to IFRS 9 and IFRS 7) (‘the ED’). Comments can be submitted until 30 June 2023.
The ED, issued by the IASB on 21 March 2023, proposes amendments to the following requirements:
a) settling financial liabilities using an electronic payment system; andb) assessing contractual cash flow characteristics of financial assets, including those with environmental, social and governance (ESG)-linked features.
The ED also proposes amendments or additions to the disclosure requirements for:
a) investments in equity instruments designated at fair value through other comprehensive income; andb) financial instruments with contractual terms that could change the timing or amount of contractual cash flows based on the occurrence (or non-occurrence) of a contingent event.
The IASB proposes to apply the amendments retrospectively, but not to restate comparative information. The amendments also propose that an entity be required to disclose information about financial assets that changed measurement category as a result of applying these amendments.
In its draft comment letter, EFRAG welcomes the IASB’s efforts to address the concerns of stakeholders and, in general, agrees with the proposed amendments to the classification and measurement of financial instruments.
In particular, EFRAG considers that the proposed clarifications to the general SPPI requirements would provide a good basis for evaluating whether contractual cash flows of financial assets with ESG-linked or similar features meet SPPI requirements. EFRAG would like to point out that the solution is expeditiously needed and welcomes the IASB efforts in this respect. Therefore, EFRAG encourages the IASB to prioritise the publication for these proposed clarifications over the rest of the proposals included in the ED, allowing entities to apply them as early as possible.
EFRAG's Draft Comment Letter can be found here.
Comments can be submitted until 30 June 2023.
