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Consultations - Long-term investing activities business models


In April 2013, EFRAG provided the IASB with its comment letter on the IASB's Exposure Draft Classification and Measurement: Limited Amendments to IFRS 9 'the ED'.

EFRAG expressed the view that the ED failed to clearly identify the business model underlying the introduction of an additional FV-OCI measurement category.

In the context of the European Commission's green paper on long-term investment, EFRAG conducted public consultation on characterising long-term investment business models from a financial reporting perspective.

On 25 October 2013, EFRAG issued letters to the IASB and the European Commission with the input received from constituents in the consultation and recommendations to the IASB on how accounting should better reflect a long-term 'liability-driven business model'.
More particularly, EFRAG recommended to the IASB:

  • that accounting requirements applicable to long-term investment entities should not ignore the interaction between the liabilities and the related assets when selecting measurement bases and defining performance reporting requirements.
  • to consider symmetrical treatment of the changes in assets and liabilities, as this is critical to faithfully represent the asset-liability management.
  • to include the long-term 'liability driven' investment business model in IFRS 9 as well as amendments to other standards dealing with assets, so that asset and liability management can be best reflected, either in a fair value through OCI or a fair value through profit or loss option.
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