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
Scott Dietz
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
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
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
