The EU has formally endorsed IFRS 9 Financial Instruments for use across member states, reflecting the changes to global accounting standards and replacement of IAS 39
As a result, the effective date across the EU will be the same as the IASB's adoption date (annual periods beginning on or after 1 January 2018 with earlier application permitted), and will replace the currently applicable IAS 39 Financial Instruments: Recognition and Measurement.
In a statement, the European Commission said the decision followed positive feedback from its accounting regulatory committee and a three-month scrutiny period by the European parliament and the Council.
The Commission said IFRS 9 aims to improve the financial reporting of financial instruments by addressing concerns that arose in this area during the financial crisis. In particular, IFRS 9 responds to the G20’s call to move to a more forward-looking model for the recognition of expected losses on financial assets.
To address the problem over insurance contracts and their incompatibility with the IFRS 9 implementation date due to technical discrepancies, the Commission will defer introduction for insurers until 2021 so that they will not have to conform with IFRS 9 2018 adoption date immediately.
The International Accounting Standards Board (IASB) is still finalising details for the forthcoming insurance contracts standard, IFRS 17 previously known as IFRS 4 Phase II Insurance Contracts.
On 12 September 2016, the IASB issued amendments to the existing insurance contracts standard, IFRS 4, which will permit pure insurance companies to defer the application date of IFRS 9 from 2018 until 2021.
The Commission has recently launched the endorsement process for this amendment to IFRS 4 with a request for feedback sent out to EFRAG on 13 October 2016.
As part of the endorsement process, the Commission will consider whether the IASB solution is satisfactory for the EU, in particular whether there is a need to extend the scope of the IASB's deferral to bancassurers (bank insurance model (BIM)).
Commission Regulation (EC) No 2016/2067 of 22 November 2016 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European parliament and of the Council was published in the Official Journal on 29 November 2016.
The Commission Regulation (EC) No 2016/2067 on IFRS 9 adoption is here
