EFRAG's Draft Comment Letter on the IASB's ED/2021/9 Non-Current Liabilities with Covenants
In its letter, EFRAG supports the IASB’s efforts to address the concerns of constituents that have emerged in the context of the IFRS Interpretations Committee’s agenda decision of December 2020 and accepts that liabilities should be classified as current or non-current based on the situation as at the end of the reporting period.
Nevertheless, EFRAG disagrees with the ED's proposal to require a separate presentation on the face of the statement of financial position of liabilities classified as non-current for which the entity’s right to defer settlement for at least twelve months after the reporting period is subject to compliance with specified conditions within twelve months after the reporting period.
EFRAG also encourages the IASB to make changes to the wording for differentiation between covenants that do not affect the classification at balance sheet date and covenants that affect the classification.
EFRAG also expresses concerns that the targeted scope of the disclosure requirements may be too broad in practice and suggests the IASB to elaborate on the application of materiality for such disclosures.
EFRAG's Draft Comment Letter can be found here.
Comments can be submitted until 9 March 2022.
Nevertheless, EFRAG disagrees with the ED's proposal to require a separate presentation on the face of the statement of financial position of liabilities classified as non-current for which the entity’s right to defer settlement for at least twelve months after the reporting period is subject to compliance with specified conditions within twelve months after the reporting period.
EFRAG also encourages the IASB to make changes to the wording for differentiation between covenants that do not affect the classification at balance sheet date and covenants that affect the classification.
EFRAG also expresses concerns that the targeted scope of the disclosure requirements may be too broad in practice and suggests the IASB to elaborate on the application of materiality for such disclosures.
EFRAG's Draft Comment Letter can be found here.
Comments can be submitted until 9 March 2022.