IASB reviews reporting requirements and IFRS 9
The International Accounting Standards Board (IASB) plans further reform of international accounting standards. The GDV is actively participating in the ongoing process.
Now that IFRS 17 Insurance Contracts has become European law, the IASB is refining other international accounting standards, such as IFRS 9 Financial Instruments. Here is the GDV's position on three current IASB consultations:
Exposure Draft “Subsidiaries without Public Accountability”
The objective of this new standard is to simplify the accounting within groups of entities. Subsidiaries and sub-groups whose financial statements are consolidated into the IFRS consolidated financial statements of the group would be allowed to use a simplified set of IFRS rules for their financial statements. While they would be subject to the full set of regular requirements for recognition, measurement and presentation, they would benefit from a reduced set of disclosure requirements.
The GDV criticises that insurers are planned to be excluded from that new IFRS standard on general principle because of their fiduciary role. In the area of IFRS accounting, an industry-based discrimination of non-capital-market-oriented subsidiaries and sub-groups of insurance groups that are in many cases globally active is not appropriate.
IASB pilot approach to improving disclosure requirements
The IASB has launched a so-called Disclosure Initiative aiming to make the information in the notes to financial statements more effective and more relevant. Part of this project is a pilot draft where the IASB suggests a fundamental change: Instead of stipulating which specific pieces of information need to be disclosed in the notes to explain and complement the aggregated line items contained in the primary elements of financial statements, the IASB, using IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits as examples, proposes overall and specific disclosure objectives companies will use to decide for themselves which pieces of information are most relevant to disclose. Additionally, the IASB would like companies to include illustrative information of a non-binding nature. The GDV supports the IASB's general intention, but suggests a less radical approach.
Post-implementation Review (PIR) of IFRS 9 Financial Instruments
On 30 September 2021 the IASB started the official consultation on the Post-implementation Review (PIR) of IFRS 9 Financial Instruments. This PIR only covers the IFRS 9 provisions for the classification and measurement of financial instruments, however. The two other areas of IFRS 9, i.e. impairment and hedge accounting, have so far been excluded from the review by the IASB.
The GDV generally supports the current provisions for the classification and measurement of financial instruments. However, the association calls for the removal of the ban on recycling for stocks and private equity investments, so that it becomes possible to recognise the gains and losses of such investments through profit and loss. Only then would equity investments no longer be disadvantaged from an accounting perspective compared to debt instruments in IFRS 9.