The International Accounting Standards Board (Board) has today issued amendments to its existing insurance contracts Standard, IFRS 4.
The amendments address concerns arising from implementing the new financial instruments Standard, IFRS 9, before implementing the replacement Standard that the Board is developing for IFRS 4. These concerns include temporary volatility in reported results.
The amendments introduce two approaches: an overlay approach and a deferral approach. The amended Standard will:
The amendments to IFRS 4 supplement existing options in the Standard that can already be used to address the temporary volatility.
Hans Hoogervorst, IASB Chairman, said:
Both the new financial instruments Standard and the upcoming insurance Standard will improve the quality and comparability of financial reporting. However, we understand that there may be transitional challenges and have given companies who deal with insurance contracts two voluntary options for dealing with these.
The new insurance contracts Standard is currently being drafted and will have an effective date no earlier than 2020.
The Proposed IFRS Taxonomy Update relating to the Amendments is available here. The comment letters should be received by the Board before 15 November 2016.