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31/03/2020 - EFRAG's pre-consultation document on the IASB's forthcoming ED on IBOR Phase 2

In order to allow for additional consultation time, EFRAG publishes a pre-consultation document, in anticipation of the IASB's forthcoming Exposure Draft IBOR Phase 2 ('the ED'). EFRAG's​ draft comment letter will ​replace this pre-consultation document later in April. EFRAG seeks constituents' views on the proposals by 15 May 2020.​


EFRAG anticipates the IASB to​​ issue the ED IBOR Phase 2 during April 2020 with a comment period of 45 days.​​ 

EFRAG has issued a pre-consultation document, based on the tentative decisions taken by the IASB. This document has been approved by EFRAG TEG and presents EFRAG TEG views on the basis of the IASB tentative decisions available on 31 March 2020. For this reason, the views in this document are preliminary and subject to change depending on the final wording in the ED.

The EFRAG’s views presented in the pre-consultation document will form the basis for EFRAG’s draft comment letter to the forthcoming ED. This pre-consultation document is issued to maximise the period during which EFRAG’s constituents are able to comment on EFRAG’s views and will be replaced by the EFRAG draft comment letter in April.

In its pre-consultation document, EFRAG welcomes the tentative decisions taken by the IASB during its deliberations on the second phase of its project on IBOR Phase 2. This is because entities will be able to reflect the effects from transitioning from IBOR to alternative benchmark rates without giving rise to accounting impacts that would not provide useful information to users of financial statements.​

In particular, EFRAG:

  • supports providing a practical expedient allowing an entity to apply paragraph B.5.4.5 of IFRS 9 Financial Instruments to account for mod​ifications related to IBOR reform. EFRAG observes that this practical expedient is eligible to provide more useful information to users of financial statements and is also expected to significantly reduce the operational burden on preparers.
  • supports the tentative decisions taken on hedge accounting because these will enable entities to continue their hedging relationships reflecting the transition from IBOR to an alternative benchmark rate.
  • observes the proposed disclosures will assist users of financial statements in understanding the effects of IBOR reform for an entity to the extent they reflect the entity-specific impacts from transitioning from IBOR to an alternative benchmark rate.​

EFRAG requests comments on its draft responses to the IASB’s proposals made on IBOR Phase 2 and to the questions raised by EFRAG by 15 May 2020. You can comment on EFRAG's pre-consultation document​ by clicking on the 'Comment publication' link below.

The pre-consultation document is available here​.