EC Amends Rule to Extend Temporary Exemption to Apply IFRS 9
EC published Regulation 2020/2097, which amends Regulation 1126/2008 and adopts certain international accounting standards in accordance with the Regulation 1606/2002 on the standard (IFRS 4) on insurance contracts. The amendments relate to the extension of the temporary exemption from the application of IFRS 9 on financial instruments. Regulation 2020/2097 shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
IASB extended, on June 25, 2020, the temporary exemption from applying IFRS 9 (amendments to IFRS 4). The amendments aim to address the temporary accounting consequences of the different effective dates of IFRS 9 and the forthcoming IFRS 17 on insurance contracts. In particular, the amendments to IFRS 4 extend the expiry date of the temporary exemption from applying IFRS 9 until 2023, to align the effective date of IFRS 9 with the new IFRS 17. Regulation 2017/1988 set the expiry date of the optional deferral of the application of IFRS 9 for entities that predominantly undertake insurance activities, including the insurance sector of a financial conglomerate falling within the scope of Directive 2002/87/EC, at January 01, 2021. Those entities should be permitted to defer the use of IFRS 9 from January 01, 2021 until January 01, 2023.
Following consultations with the European Financial Reporting Advisory Group, EC concluded that the amendments to IFRS 4 meet the criteria for adoption set out in Article 3(2) of Regulation 1606/2002. Therefore, Regulation 1126/2008 has been amended accordingly and IFSR 4 has been amended, as set out in the Annex to Regulation 2020/2097. Each company and each financial conglomerate as defined in Article 2 of Regulation 2017/1988 shall apply the amendments to IFRS 4 from January 01, 2021, for financial years starting on or after January 01, 2021.
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Effective Date: January 05, 2021
Keywords: Europe, EU, Insurance, Accounting, IFRS 4, IFRS 17, IFRS 9, Insurance Contracts, Financial Instruments, Temporary Exemption, Regulation 1126/2008, IASB, EC
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