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.
Related Links
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
Featured Experts
Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant
Metin Epözdemir
Metin Epözdemir helps European and African banks with design and implementation of credit risk, stress testing, capital management, and credit loss accounting solutions.
Dieter Van der Stock
IFRS subject matter expert; LDTI subject matter expert; accounting authority; risk management specialist
Previous Article
EBA Issues Standards on Prudential Treatment of Investment FirmsRelated Articles
HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
EBA Guide to Monitor Threshold for Intermediate Parent Undertakings
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
PRA Finalizes Approach to Supervision of International Banks
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
FCA Issues PS21/9 on Implementation of Investment Firms Regime
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
EBA Proposes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
IOSCO Proposes Recommendations on ESG Ratings and Data Providers
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
ESMA Group Issues Recommendations on RFR Switch in Interdealer Market
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
ECB Study Assesses Impact of Basel III Finalization Package
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
PRA Updates Remuneration Policy Statement Templates and Tables
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.
