June 2020 IFRS® Standards Extension of the Temporary Exemption from Applying IFRS 9 Amendments to IFRS 4 Extension of the Temporary Exemption from Applying IFRS 9 Amendments to IFRS 4 Extension of the Temporary Exemption from Applying IFRS 9 is issued by the International Accounting Standards Board (Board). Disclaimer: To the extent permitted by applicable law, the Board and the IFRS Foundation (Foundation) expressly disclaim all liability howsoever arising from this publication or any translation thereof whether in contract, tort or otherwise to any person in respect of any claims or losses of any nature including direct, indirect, incidental or consequential loss, punitive damages, penalties or costs. Information contained in this publication does not constitute advice and should not be substituted for the services of an appropriately qualified professional. ISBN: 978-1-911629-76-4 Copyright © 2020 IFRS Foundation All rights reserved. Reproduction and use rights are strictly limited. Please contact the Foundation for further details at [email protected]. Copies of Board publications may be ordered from the Foundation by emailing [email protected] or visiting our shop at https://shop.ifrs.org. The Foundation has trade marks registered around the world (Marks) including ‘IAS®’, ‘IASB®’, the IASB® logo, ‘IFRIC®’, ‘IFRS®’, the IFRS® logo, ‘IFRS for SMEs®’, the IFRS for SMEs® logo, ‘International Accounting Standards®’, ‘International Financial Reporting Standards®’, the ‘Hexagon Device’, ‘NIIF®’ and ‘SIC®’. Further details of the Foundation’s Marks are available from the Foundation on request. The Foundation is a not-for-profit corporation under the General Corporation Law of the State of Delaware, USA and operates in England and Wales as an overseas company (Company number: FC023235) with its principal office in the Columbus Building, 7 Westferry Circus, Canary Wharf, London, E14 4HD. EXTENSION OF THE TEMPORARY EXEMPTION FROM APPLYING IFRS 9 CONTENTS from page AMENDMENTS TO IFRS 4 INSURANCE CONTRACTS 4 APPROVAL BY THE BOARD OF EXTENSION OF THE TEMPORARY EXEMPTION FROM APPLYING IFRS 9 ISSUED IN JUNE 2020 5 AMENDMENTS TO THE BASIS FOR CONCLUSIONS ON IFRS 4 INSURANCE CONTRACTS 6 © IFRS Foundation 3 AMENDMENTS TO IFRS 4—JUNE 2020 Amendments to IFRS 4 Insurance Contracts Paragraphs 20A, 20J and 20O are amended. New text is underlined and deleted text is struck through. Temporary exemption from IFRS 9 20A IFRS 9 addresses the accounting for financial instruments and is effective for annual periods beginning on or after 1 January 2018. However, for an insurer that meets the criteria in paragraph 20B, this IFRS provides a temporary exemption that permits, but does not require, the insurer to apply IAS 39 Financial Instruments: Recognition and Measurement rather than IFRS 9 for annual periods beginning before 1 January 20232021. An insurer that applies the temporary exemption from IFRS 9 shall: (a) ... ... 20J If an entity no longer qualifies for the temporary exemption from IFRS 9 as a result of a reassessment (see paragraph 20G(a)), then the entity is permitted to continue to apply the temporary exemption from IFRS 9 only until the end of the annual period that began immediately after that reassessment. Nevertheless, the entity must apply IFRS 9 for annual periods beginning on or after 1 January 20232021. For example, if an entity determines that it no longer qualifies for the temporary exemption from IFRS 9 applying paragraph 20G(a) on 31 December 2018 (the end of its annual period), then the entity is permitted to continue to apply the temporary exemption from IFRS 9 only until 31 December 2019. ... Temporary exemption from specific requirements in IAS 28 20O Paragraphs 35–36 of IAS 28 Investments in Associates and Joint Ventures require an entity to apply uniform accounting policies when using the equity method. Nevertheless, for annual periods beginning before 1 January 20232021, an entity is permitted, but not required, to retain the relevant accounting policies applied by the associate or joint venture as follows: (a) ... ... 4 © IFRS Foundation EXTENSION OF THE TEMPORARY EXEMPTION FROM APPLYING IFRS 9 Approval by the Board of Extension of the Temporary Exemption from Applying IFRS 9 issued in June 2020 Extension of the Temporary Exemption from Applying IFRS 9, which amends IFRS 4, was approved for issue by all 14 members of the International Accounting Standards Board. Hans Hoogervorst Chairman Suzanne Lloyd Vice-Chair Nick Anderson Tadeu Cendon Martin Edelmann Françoise Flores Gary Kabureck Jianqiao Lu Darrel Scott Thomas Scott Chungwoo Suh Rika Suzuki Ann Tarca Mary Tokar © IFRS Foundation 5 AMENDMENTS TO IFRS 4—JUNE 2020 Amendments to the Basis for Conclusions on IFRS 4 Insurance Contracts A footnote is added to the end of paragraphs BC267, BC275 and BC276 as follows. For ease of reading new text is not underlined. Fixed expiry date for the temporary exemption * In June 2020, the Board extended the expiry date for the temporary exemption from IFRS 9 to annual periods beginning on or after 1 January 2023 (see paragraphs BC277A‒BC277C). Paragraphs BC277A‒BC277C are added. For ease of reading new text is not underlined. ... Amendments to IFRS 17 Insurance Contracts BC277A In June 2020, the Board extended the expiry date for the temporary exemption from IFRS 9 by two years to annual periods beginning on or after 1 January 2023. The extension maintains the alignment between the expiry date of the temporary exemption and the effective date of IFRS 17, which replaces IFRS 4. In June 2020, the Board deferred the effective date of IFRS 17 by two years to annual periods beginning on or after 1 January 2023. BC277B The Board was reluctant to extend the temporary exemption beyond 1 January 2021 because doing so results in some entities (including entities with significant holdings of financial assets) first applying IFRS 9 up to five years after other entities. However, the Board noted that in originally introducing a temporary exemption from IFRS 9 for some insurers, it had concluded that, for this limited population of entities, the benefit of the relief provided by the temporary exemption outweighed the disadvantages of delaying the improved information resulting from applying IFRS 9 (see paragraph BC249). For similar reasons, the Board concluded that, on balance, the benefit of extending the availability of the relief to continue to enable some insurers to first apply IFRS 17 and IFRS 9 at the same time outweighs the disadvantages of the additional delay to the application of IFRS 9. BC277C The Board considered whether it should specify additional disclosures as a consequence of extending the expiry date of the temporary exemption. Such disclosures would require insurers applying the temporary exemption to provide additional information about expected credit losses. The Board concluded that adding such disclosures to the requirements in IFRS 4 would be disruptive when many insurers were at a late stage of IFRS 9 and IFRS 17 implementation. 6 © IFRS Foundation IAS® International Financial Reporting Standards® IFRIC® IFRS Foundation® SIC® IFRS® IASB® Contact the IFRS Foundation for details of countries where its trade marks are in use or have been registered. The International Accounting Standards Board is the independent standard-setting body of the IFRS Foundation Columbus Building | 7 Westferry Circus | Canary Wharf London E14 4HD | United Kingdom Telephone: +44 (0)20 7246 6410 Email: [email protected] | Web: www.ifrs.org Publications Department Telephone: +44 (0)20 7332 2730 Email: [email protected].