The March 2016, Issue 52 of KPMG ISG’s IFRS Newsletter: Insurance highlights the March IASB meeting, at which the Board discussed feedback received about its Exposure Draft, Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4), redeliberated certain issues, and discussed next steps for completing the amendments.
Summary of Feedback Received. The Board received 95 comment letters about the Exposure Draft. It consulted users of financial statements, who seemed to favor the overlay approach under which insurance entities would exclude from profit or loss the difference between the amounts recognized under IFRS 9, Financial Instruments, and IAS 39, Financial Instruments: Recognition and Measurement, for specified assets related to insurance activities. In contrast, preparers generally favored a temporary exemption from applying IFRS 9. Both groups stated that the IASB should widen the scope of the temporary exemption. Preparers supported allowing the temporary exemption at levels below the reporting entity; users tended not to agree with that view.
Key Decisions. The Board decided to retain the overlay approach and the temporary exemption, and to require entities to assess the eligibility criteria for the temporary exemption at the reporting entity level. The Board also decided that there should be an expiration date for the temporary exemption, but did not decide what that date should be.
Next Steps. The Board intends to discuss the remaining technical issues in April and May, specifically, the eligibility criteria, additional disclosure requirements, and the expiration date for the temporary exemption. The final amendments to IFRS 4, Insurance Contracts, are expected to be issued in September 2016.