The European Monetary Reporting Advisory Group (EFRAG) has launched a suggestions assertion on the Worldwide Accounting Requirements Board’s (IASB) Publicity Draft (ED) Provisions – Focused Enhancements.
EFRAG’s assertion summarises stakeholder suggestions and explains the way it knowledgeable EFRAG’s ultimate remark letter (FCL), submitted to the IASB on 1 April 2025, in response to the IASB’s ED IASB/ED/2024/8.
The ED proposed amendments to 3 features of IAS 37 Provisions, Contingent Liabilities and Contingent Belongings.
These embody the factors for recognising a provision, particularly the requirement for a gift obligation from a previous occasion, the necessities for measuring a provision associated to future expenditure and the low cost price used to convey that expenditure to current worth.
The FCL assessed that the proposals create much less clear steerage for some forms of provisions.
Moreover, EFRAG discovered that the proposals enhance reliance on judgement, which can not result in a discount in compliance prices.
A consequence of amending the current obligation recognition criterion is the withdrawal of IFRIC 21 Levies.
EFRAG welcomed this however famous that the Publicity Draft didn’t totally handle beforehand raised issues relating to IFRIC 21.
EFRAG beneficial that the IASB refine definitions of authorized and constructive obligations, specify standards for alternate transactions, outline qualifying previous occasions, make clear actions taken over time and decide when an entity can not keep away from an motion.
EFRAG additionally recommended field-testing the necessities and enhancing examples within the proposed steerage for IAS 37.
Within the FCL, EFRAG supported proposed enhancements to the measurement of provisions, particularly the clarification of required expenditure and specifying a risk-free low cost price, excluding non-performance danger.
Nevertheless, EFRAG highlighted a number of areas needing additional steerage and clarification.
EFRAG recommended that the IASB might finalise the measurement amendments extra rapidly than these associated to the current obligation recognition criterion.
“EFRAG feeds again on IASB publicity draft on provisions enhancements ” was initially created and printed by The Accountant, a GlobalData owned model.
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