EFRAG Releases Draft Comment Letter on the IASB’s Exposure Draft Risk Mitigation Accounting
EFRAG has published its Draft Comment Letter ('DCL') on the IASB's Exposure Draft (ED’) Risk Mitigation Accounting-Proposed amendments to IFRS 9 and IFRS 7 (‘RMA’). Stakeholders are invited to comment on EFRAG’s DCL by 22 June 2026.
At this stage, EFRAG has not formed a position on several aspects and is seeking further evidence and feedback before finalising its response to the IASB. To this end, the DCL sets out a series of questions for constituents, which will inform EFRAG’s final views.
On the objective of RMA, some stakeholders see merit in considering both a faithful representation to reflect an entity’s risk management activities and eliminating accounting mismatches to be equal objectives of RMA. EFRAG notes that if the primary objective of RMA is for an entity to faithfully reflect its repricing risk management activities, EFRAG questions why certain financial instruments would be excluded from being eligible to be included in the underlying portfolios. This includes, for instance, financial assets measured at fair value through profit or loss, which are managed as part of an entity’s interest risk management strategy.
While significant uncertainties exist as to how the risk mitigation adjustment excess test should be performed in practice, EFRAG suggests that additional guidance on the indicators would be very useful.
Furthermore, views among constituents are mixed on the proposed effective date of the RMA model and on when IAS 39 should be withdrawn. There is, however, broad agreement that the transition period should be relatively long.
Additionally, EFRAG generally welcomes the proposed disclosure requirements, as these would be a significant improvement compared to current IFRS Accounting requirements, particularly for those applying the EU IAS 39 carve-out.
Finally, EFRAG emphasises the importance of developing an accounting solution that better reflects the dynamic interest rate risk management of entities issuing insurance contracts as per IFRS 17, compared to current requirements.
Next steps
In March, EFRAG will publish a specific survey to obtain input on the technical aspects of the RMA model.