EFRAG Draft Comment Letter on the IASB's Exposure Draft Annual Improvements - Volume 11

​The ED, issued by the IASB in September 2023, proposes narrow-scope amendments to the IFRS Accounting Standards identified below and accompanying guidance as part of its periodic maintenance of the IFRS Accounting Standards:

• IFRS 1 First-time Adoption of International Financial Reporting Standards - hedge accounting by a first-time adopter;

• IFRS 7 Financial Instruments: Disclosures - gain or loss on derecognition;

• Guidance on implementing IFRS 7:

• introduction;

• disclosure of deferred difference between fair value and transaction price;

• credit risk disclosures;

• IFRS 9 Financial Instruments:

• derecognition of lease liabilities;

• transaction price;

• IFRS 10 Consolidated Financial Statements - determination of a 'de facto agent'; and

• IAS 7 Statement of Cash Flows - cost method.

The IASB proposes to apply the amendments retrospectively with an earlier application permitted.

In its draft comment letter, EFRAG welcomes the package of the annual improvements included in the ED and agrees with the majority of the proposed amendments. In EFRAG's view, they would improve consistent application and understandability of the IFRS Accounting Standards.

However, EFRAG disagrees with the IASB's proposed amendment to IFRS 9 on derecognition of lease liabilities and recommends the IASB to clarify the interaction between IFRS 9 and IFRS 16 as part of a narrow-scope standard-setting project.

Regarding the proposed amendment to IFRS 10 on de facto agents, EFRAG recommends the IASB reconsider whether a look-up approach (i.e., including those that direct the activities of the investor) could ever be used for assessing if a party is a de facto agent for the purposes of the entity's consolidated financial statements.

EFRAG's Draft Comment Letter can be found here.

Comments can be submitted until 28 November 2023.