IASB publish ED/2021/8 – proposed amendment to IFRS 17

Today, the IASB have published the Exposure Draft ED/2021/8 comprising another proposed amendment to IFRS 17.

This draft addresses an implementation issue, which arises when an (insurance) entity initially applies both IFRS 17 and IFRS 9 in the same reporting period, e.g. in the year 2023. If so, accounting mismatches may occur in respect of the comparative period, i.e. the year 2022, for which IFRS 17 requires a full restatement, while IFRS 9 allows a partial restatement only (e.g. no restatement is allowed for financial instruments that are derecognised during 2023).

The draft proposes to add to IFRS 17 an additional transition rule affecting the presentation of comparatives. The amendment would permit an entity to apply a “classification overlay” in the comparative periods presented on initial application of both standards. This optional classification overlay would:

• apply to financial assets for which comparative information has not been restated for IFRS 9,
• allow an entity to align classification of these financial assets with the expected classification on initial application of IFRS 9,
• be optional on an instrument-by-instrument basis,
• apply only to financial assets that are connected with insurance contracts, and
• not apply to comparative information for periods before the IFRS 17 transition date.

Comments on this exposure draft are received by 27 September 2021 the latest. The IASB intend to finalise this amendment by end of 2021.