Page 1 of 6Our Ref.: C/FRSCSent electronically through the IASB Website (www.ifrs.org)
25 May 2020Mr Hans HoogervorstInternational Accounting Standards BoardColumbus Building7 Westferry CircusCanary WharfLondon E14 4HDUnited KingdomDear Hans,IASB Exposure Draft ED/2020/1Interest Rate Benchmark Reform – Phase 2 (Proposed amendments to IFRS 9,IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The Hong Kong Institute of Certified Public Accountants (HKICPA) is the only bodyauthorised by law to set and promulgate standards relating to financial reporting, auditingand ethics for professional accountants, in Hong Kong. We are grateful for the opportunityto provide you with our views on this Exposure Draft (ED).The HKICPA appreciates the IASB’s initiative and timely response to the financialreporting issues that arise from the interest rate benchmark reform (the reform). Overall,the HKICPA welcomes and supports the proposals in the ED and generally agrees thatthey would provide useful information to users about the effect of the reform on an entity’sfinancial statements while reducing the operational burden on preparers.That said, some of our stakeholders have expressed concerns about the proposedamendments in relation to fair value and cash flow hedges. Specifically, they areconcerned about the conceptual rationale for and the practical difficulties of remeasuringthe hedged cash flows (in a cash flow hedge) and the hedged risk (in a fair value hedge)
based on the alternative benchmark rate on an “as if” basis, which they interpret byreading paragraphs 6.9.11, 6.9.12 and BC63 of the ED. Our stakeholders also questionedthe relevance of the resulting accounting outcome to users of financial statements.Accordingly, they strongly recommended that the IASB considers an alternative approachthat allows for de-designation and re-designation of the hedging relationship. The HKICPAunderstands that the IASB’s intention is to provide relief to entities so that they cancontinue their existing hedging relationships. However, the HKICPA recommends that theIASB clarifies how these paragraphs of the ED should be interpreted and applied, andreconsiders whether these particular proposals would lead to an outcome aligned with theobjective of this project in paragraph BC6 of the ED.Our stakeholders also raised concerns about the proposal to reinstate a discontinuedhedging relationship on transition to an alternative benchmark rate. The HKICPArecommends that the IASB explains the rationale for this requirement and clarifies whichhedging relationships would survive if an entity has already re-designated the derivativein another hedging relationship.Our detailed responses to the questions raised in this ED are in the Appendix.Page 2 of 6If you have any questions regarding the matters raised in this letter, please contact me,Carmen Ho (carmenho@hkicpa.org.hk), or Eky Liu (eky@hkicpa.org.hk), AssociateDirectors of the Standard Setting Department.Yours sincerely,Michelle FisherDeputy Director, Standard Setting DepartmentPage 3 of 6APPENDIX 1Work undertaken by the HKICPA in forming its views:
The HKICPA:
(a) issued an Invitation to Comment on the ED on 14 April 2020 to our stakeholders;
(b) sought input from its Financial Instruments Advisory Panel comprising technical andindustry experts and auditors from accounting firms; and(c) developed its views through its Financial Reporting Standards Committee, havingreflected on its stakeholder feedback. The Committee comprises academics, preparerrepresentatives from various industry sectors, investors, regulators, and technical andindustry experts from small, medium and large accounting firms.This submission outlines the HKICPA's views as well as the main comments from ourstakeholders on the ED. In addition to the comments in this letter, our financial institutionpreparers provided a few suggestions to further clarify the proposals and address practicalchallenges and these are attached in Appendix 2.Question 1—Modifications of financial assets and financial liabilitiesThe HKCPA supports the IASB’s proposal to provide a practical expedient that requiresan entity to apply paragraph B5.4.5 of IFRS 9 to account for modifications arising from thereform. We agree that this proposal would provide more useful information to users offinancial statements while also reducing the operational burden on preparers.The HKICPA also supports the IASB’s proposal for what constitutes a modification in thecontext of the reform and the qualifying criteria for the practical expedient. We agree thatthe description of a modification in paragraph 6.9.2 should only be applicable tomodifications included in the scope of the amendments (i.e. limited to changes made asa result of the reform). We consider that extending the scope of the amendments to otherchanges could have possible unintended consequences and would require a separateproject for further discussion.The HKICPA would also like to highlight the following areas where further clarificationand/or improvement would be helpful in the final amendments:
We recommend replacing the words “is required” with “arises” in paragraphs 6.9.3(a)
and 6.9.5(b) of the ED. We consider that the wording “is required” may imply thatentities can only apply the practical expedient when the modification is required bylaw or regulation, and a modification arising as a direct consequence of the reformmay not always be required by law or regulation.We consider that the term “practical expedient” implies that an entity has an option toapply the proposed requirements in the ED, but the IASB is proposing a mandatoryexception to the current requirements. For the avoidance of doubt, the HKICPAsuggests that the term “practical expedient” be replaced by “mandatory exception”.There appears to be an inconsistency between paragraphs 6.9.6 and BC35 of the EDregarding the order of accounting for changes made as a result of the reform andother additional changes. Paragraph BC35 indicates that if there are changes to thebasis for determining the contractual cash flows in addition to those required by thereform, an entity would first assess whether those other changes to the financialinstrument result in derecognition. However, paragraph 6.9.6 requires an entity toperform this derecognition assessment after the practical expedient is applied tochanges made as a result of the reform. We recommend that the IASB clarifies orremoves this inconsistency in the final amendments.The HKICPA agrees with the proposed amendments to IFRS 4 and IFRS 16, and agreesthat no amendments to other IFRS Standards are necessary.Page 4 of 6Question 2—Amendments to hedging relationshipsThe HKICPA generally agrees with the IASB’s proposals in paragraphs 6.9.7 to 6.9.10 ofthe ED regarding when entities should be entitled to amend their hedge relationships asa direct consequence of the reform.However, some of our stakeholders expressed concerns over the sufficiency andcompleteness of the permitted changes to the hedge documentation in paragraph 6.9.7of the ED. They noted that there are likely to be several other changes to hedgedocumentation arising from the transition to alternative benchmark rates, including someof the other items covered by paragraph 6.9.4 of the ED. Accordingly, the HKICPArecommends that those items in paragraph 6.9.7 of the ED be provided as examples ofpermitted changes rather than an exhaustive list.In addition, some of our stakeholders also expressed concerns about the potentialoperational difficulties of complying with paragraph 6.9.7 of the ED as and when theuncertainty arising from the reform is no longer present. They noted that entities may needto amend the formal designation of different hedging relationships at different times oramend the formal designation of a particular hedging relationship more than once. Thesestakeholders suggested giving entities a period of time during which to comply with theproposed requirements. Therefore, the HKICPA suggests that the IASB permits entitiesto amend the hedge designation between the point in time when the uncertainty arisingfrom the reform is no longer present and the end of the reporting period. The HKICPAalso recommends that the IASB clarifies in the body of the final amendments whether, inaddition to amending the formal designation, entities also need to perform a prospectiveeffectiveness test under IFRS 9 and IAS 39 and a retrospective effectiveness test underIAS 39.Question 3—Accounting for qualifying hedging relationships and groups of itemsFair value hedgesSome of our stakeholders expressed significant concerns about the proposedrequirements for fair value hedges in paragraph 6.9.11 of the ED. Specifically, paragraph
6.9.11, together with the explanation in paragraph BC63 of the ED, may be interpreted asrequiring entities to remeasure both the hedging instrument and the hedged item at thesame time based on the new benchmark rate on an ‘as if’ basis, regardless of whetherthe hedged item has been changed. Some stakeholders questioned the conceptualrationale and the usefulness of recognising an immediate gain or loss from remeasuringthe hedged item (e.g. a fixed-rate loan) if the hedged item has not changed, and whenthis does not reflect the actual risk being hedged prior to the modification. They consideredthat this accounting outcome does not reflect the economic effects of the transition toalternative benchmark rates and would result in less useful information than if the hedgewas discontinued. In addition, our stakeholders are concerned that remeasuring thehedged item on an “as if” basis would pose application complexities for entities becausethe alternative benchmark rates might not have existed at the inception of the hedgingrelationships. Therefore, the remeasurement to reflect changes in value attributable to thealternative benchmark rate would necessitate ‘made-up’ amounts that would not berelevant for users of financial statements.For these reasons, for fair value hedges on transition to an alternative benchmark rate,our stakeholders considered that discontinuing the existing hedging relationship andrestarting hedge accounting for the new hedging relationship would be moreunderstandable and useful to users of financial statements. Accordingly, they suggesteddeleting paragraph 6.9.11 of the ED and applying an alternative approach that would allowfor discontinuation of the existing hedge relationship and designation of a new relationship.Page 5 of 6The HKCPA understands that the IASB’s intention is to provide relief to entities so thatthey can continue their existing hedging relationships. However, we recommend that theIASB clarifies how paragraph 6.9.11 of the ED should be interpreted and applied, andreconsiders whether these particular proposals would lead to an outcome aligned with theobjective of this project in paragraph BC6 of the ED.Cash flow hedgesSimilar to fair value hedges, our stakeholders expressed significant concerns about thepractical difficulties and the usefulness of remeasuring the hedged cash flows based onthe alternative benchmark rate on an “as if” basis for cash flow hedges, which theyinterpret by reading paragraph 6.9.12(b) together with the explanation in paragraphBC63(b) of the ED. Similarly, our stakeholders consider that discontinuing hedgeaccounting for the existing hedging relationship and restarting hedge accounting for cashflow hedges on transition to an alternative benchmark rate would provide more relevantand reliable information, as it would not require an entity, for example, to develophypothetical derivatives with fixed legs based on ‘made-up’ rates that might not haveexisted at hedge inception. However, they agree relief would still be required to preventimmediate recycling of the cash flow hedge reserve and suggested entities assume thehedged future cash flows are still expected to occur to avoid this.The HKICPA recommends that to help to respond to these concerns the IASB clarifieshow paragraph 6.9.12(b) should be interpreted and applied and re-considers whether theresulting outcome would align with the objective of this project in paragraph BC6 of theED.Groups of itemsThe HKICPA agrees with the IASB’s proposal in paragraph 6.9.15 of the ED in relation togroups of items designated as hedged items in a hedging relationship.Retrospective effectiveness test under IAS 39Our stakeholders questioned how the proposal in paragraph 102S of the ED would beapplied to a hedge effectiveness test that is assessed on a cumulative basis. Thesestakeholders considered that if entities reset the cumulative change in fair value to zero,the hedged item and the hedging instrument will still have a non-zero fair valueimmediately after ceasing to apply paragraph 102G of IAS 39 and that may impact theeffectiveness of the hedge going forward. Some stakeholders also foresee difficulties inusing the regression model to perform the test on transition to an alternative benchmarkrate. Therefore, the HKICPA recommends that the IASB provides clarification on how toperform the retrospective effectiveness test under IAS 39 based on the proposal inparagraph 102S of the ED.Question 4—Designation of risk components and portionsThe HKICPA agrees with the IASB’s proposal to provide temporary relief from therequirement for risk components to be separately identifiable to qualify for hedgeaccounting to relieve the operational burden on entities when transitioning to thealternative benchmark rate. As noted in paragraph BC95 of the ED, there may be diversityin the approaches to the reform across different jurisdictions. In this context, the HKICPAagrees that 24 months is a reasonable timeframe to allow the relevant markets to developduring the early stages of the reform and for the entities to comply with the separatelyidentifiable criterion while avoiding potential operational disruption.Nevertheless, our stakeholders note it is unclear, applying 6.9.17, whether the cash flowhedge reserve should be immediately recycled to profit and loss if subsequently an entityreasonably expects that the alternative benchmark rate will not be separately identifiablewithin the 24 month timeframe. The HKICPA suggests that the IASB considers whether itwould be helpful to clarify this in its final amendments.Page 6 of 6Question 5—Effective date and transitionThe HKICPA supports the proposed effective date and permitted earlier application inview of the urgency of the practical expedient and the relief.The HKICPA also supports mandatory application of the proposals to avoid selectiveapplications to achieve intended accounting outcomes, thereby enhancing comparabilityof financial statements across entities. Nevertheless, our stakeholders considered that ifthe IASB does not adopt their alternative approach (refer our response to question 3 thatsuggests discontinuing hedge accounting for the existing hedging relationship anddesignation of a new hedging relationship), they would suggest allowing the voluntary de-designation and re-designation of hedge relationships where entities believe this resultsin more relevant and reliable information.Our stakeholders also expressed concerns about the proposed requirement of reinstatinga discontinued hedging relationship on transition, which as noted in paragraph BC112 ofthe ED, is inconsistent with the current requirements in IFRS 9 and IAS 39 in which hedgeaccounting is applied prospectively. In practice, once a hedge is discontinued, thederivatives may have been re-designated in other hedging relationships. Therefore, theHKICPA recommends that the IASB clarifies:
the rationale for requiring reinstatement of a discontinued hedging relationship; and which hedging relationship would survive if an entity has already re-designated thederivative in another hedging relationship.Question 6—DisclosuresThe HKICPA agrees with the IASB’s proposed disclosures and considers that they wouldprovide useful information to users of the financial statements about the effect of thereform on an entity’s financial statements and its risk management, while achieving anappropriate cost-benefit balance.~ End ~HKAB’s Comments on IASB Exposure Draft ED/2020/1 Interest Rate Benchmark Reform - Phase 2 Proposed Amendmentsto IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16NoIASB QuestionHKAB Comments / Feedback
1.Modifications of financial assets and financial liabilities (paragraphs
6.9.1–6.9.6 of the [Draft] amendments to IFRS 9, paragraphs 20R–20S and50–51 of the [Draft] amendments to IFRS 4 and paragraphs 104–106 andC1A–C1B of the [Draft] amendments to IFRS 16)
Paragraphs 6.9.2–6.9.6 of the draft amendments to IFRS 9 propose that:
(a) a financial asset or financial liability would be modified if the basis fordetermining the contractual cash flows is changed after the initialrecognition of the financial instrument. In this context, a modification canarise even if the contractual terms of the financial instrument are notamended.(b) an entity would apply paragraph B5.4.5 of IFRS 9 as a practical expedientto account for a modification of a financial asset or financial liability thatis required by interest rate benchmark reform.(c) a modification is required by interest rate benchmark reform if and only if(i) it is required as a direct consequence of interest rate benchmark reform;
and (ii) the new basis for determining the contractual cash flows iseconomically equivalent to the previous basis (ie the basis immediatelypreceding the modification).(d) an entity would also apply the practical expedient proposed in paragraph
6.9.3 if an existing contractual term is activated that results in a change inthe basis for determining the contractual cash flows of a financial asset ora financial liability, and particular other conditions are met.We agree with the proposal since it provides useful information to financialstatement users, avoids unnecessary modification of financial instruments orintroduction of new definition under IFRS 9, and reduce the operational burdenon financial statement preparers.APPENDIX 2Comments from Hong Kong Association of BanksNoIASB QuestionHKAB Comments / FeedbackParagraphs BC10–BC36 of the Basis for Conclusions describe the Board’sreasons for these proposals.(e) The Exposure Draft proposes to make corresponding amendments to IFRS4 that would require insurers applying the temporary exemption from IFRS9 to apply the same practical expedient as described above.(f) The Exposure Draft proposes amendments to IFRS 16 that would requireentities to apply paragraph 42 of IFRS 16 to account for a leasemodification that is required by interest rate benchmark reform.Paragraphs BC39–BC41 and paragraphs BC118–BC125 of the Basis forConclusions describe the Board’s reasons for these proposals.Do you agree with these proposals? Why or why not? If you agree with onlyparts of the proposals, please specify what you agree and disagree with. If youdisagree with the proposals, please explain what you propose and why.
2.Amendments to hedging relationships (paragraphs 6.9.7–6.9.10 of the[Draft] amendments to IFRS 9 and paragraphs 102O–102R of the [Draft]amendments to IAS 39)
Paragraphs 6.9.7–6.9.10 of the draft amendments to IFRS 9 and paragraphs102O–102R of the draft amendment to IAS 39 propose that an entity wouldamend the formal designation of the hedging relationship only to make one ormore of the changes specified in paragraph 6.9.7 and paragraph 102O as andwhen uncertainty arising from interest rate benchmark reform is no longerpresent with respect to the hedged risk and/or the timing and the amount ofinterest rate benchmark-based cash flows of the hedged item or of the hedginginstrument.We agree with the proposal as it enables entities to continue hedge relationshipswith modifying hedged items and hedging instruments as a direct consequenceof the IBOR reform. This is in line with the economic substance of thetransactions.Regarding paragraph 6.9.7 of IFRS 9 and paragraph 102O of IAS 39, in caseswhere there is a structural market change as a result of the IBOR reform (i.e.overnight floating rate IBOR cash products are replaced with overnight fixedrate cash products), we seek clarification whether such structural marketchange is permitted. If so, we suggest the IASB to specify such permittedchange in the respective paragraphs of IFRS 9 and IAS 39.In respect of the amendments to IAS 39, one of the tentative decision made bythe IASB during the meeting held on 11-12 December 2019 previously was notincluded in the ED, which being the requirement on an entity changing theNoIASB QuestionHKAB Comments / FeedbackParagraphs BC42–BC50 of the Basis for Conclusions describe the Board’sreasons for these proposals.Do you agree with these proposals? Why or why not? If you agree with onlyparts of the proposals, please specify what you agree and disagree with. If youdisagree with the proposals, please explain what you propose and why.hedged risk in the hedge documentation for a portfolio hedge of interest raterisk to assume all items included in the portfolio of financial assets or financialliabilities share the risk being hedged. Accordingly, we suggest thisrequirement to be added in the final amendments to IAS 39.
3.Accounting for qualifying hedging relationships and groups of items(paragraphs 6.9.11–6.9.15 of the [Draft] amendments to IFRS 9 andparagraphs 102S–102X of the [Draft] amendments to IAS 39)
Paragraphs 6.9.11–6.9.15 of the draft amendments to IFRS 9 and paragraphs102S–102X of the draft amendments to IAS 39 propose that:
(a) the requirements in IFRS 9 and IAS 39 would be applied when thedesignation of a hedging relationship is amended to remeasure the hedginginstrument and the hedged item based on the alternative benchmark rateand recognise any resulting ineffectiveness in profit or loss.(b) the amount accumulated in the cash flow hedge reserve at the date theentity amends the description of the hedged item would be deemed to bebased on the alternative benchmark rate on which the hedged future cashflows are determined.(c) when there is a change in the basis for determining the contractual cashflows of a financial asset or a financial liability previously designated as ahedged item in a hedging relationship that has been discontinued, theamount accumulated in the cash flow hedge reserve for the discontinuedhedging relationship would be deemed to be based on the alternativebenchmark rate on which the hedged future cash flows will be based.(d) when applying paragraph 6.9.7 or paragraph 102O to groups of itemsdesignated as hedged items, the hedged items would be allocated to sub-We agree with the proposal as this reflects the underlying economic substanceof the transaction properly. We suggest the IASB to provide illustrativeexamples to elaborate the application for each type of hedging relationshipupon the transition to alternative benchmark rate.Also, in cases where the hedge has been regarded as highly effective (i.e. actualresults of the hedge are within the range of 80-125 per cent) during Phase 1 ofthe Interest Rate Benchmark Reform, resetting cumulative effectiveness whenassessing retrospective effectiveness in Phase 2 is considered not necessary.Therefore, we suggest the IASB to consider permitting instead of requiringentities to reset cumulative effectiveness when assessing retrospectiveeffectiveness as required by IAS 39.NoIASB QuestionHKAB Comments / Feedbackgroups within the same hedging relationship based on the benchmark rateto which they are referenced and that the proportionality test would beapplied to each sub-group separately.(e) for the purpose of assessing retrospective effectiveness as required by IAS39, the cumulative fair value changes of the hedged item and hedginginstrument would be reset to zero when paragraph 102G of IAS 39 ceasesto apply.Paragraphs BC51–BC79 of the Basis for Conclusions describe the Board’sreasons for these proposals.Do you agree with these proposals? Why or why not? If you agree with onlyparts of the proposals, please specify what you agree and disagree with. If youdisagree with the proposals, please explain what you propose and why.
4.Designation of risk components and portions (paragraphs 6.9.16–6.9.18 ofthe [Draft] amendments to IFRS 9 and paragraphs 102Y–102Z1 of the[Draft] amendments to IAS 39)
Paragraphs 6.9.16–6.9.18 of the draft amendments to IFRS 9 and paragraphs102Y–102Z1 of the draft amendments to IAS 39 propose that:
(a) an alternative benchmark rate designated as a non-contractually specifiedrisk component that is not separately identifiable at the date it is designated,would be deemed to have met that requirement at that date, if and only if,the entity reasonably expects the alternative benchmark rate will beseparately identifiable within a period of 24 months from the date thealternative benchmark rate is designated as a risk component.(b) if subsequently, an entity reasonably expects that the alternativebenchmark rate will not be separately identifiable within 24 months fromthe date it was designated as a risk component, an entity would ceaseWe agree with the proposal as it is a practical expedient for hedge accountingapplication in the context of early stage of the IBOR reform where the marketfor alternative benchmark rate might not be sufficiently developed.Nonetheless, we suggest the IASB to consider below suggestions:
(i) Provide further guidance on the factors or situations which the entitiescould consider when justifying that they “reasonably expect” thealternative benchmark rate will or will not be separately identifiable; and(ii) Provide clarification on BC87 and BC88 whether an available termstructure of zero coupon interest rates is required for a benchmark to beconsidered separately identifiable. With reference to Paragraph B6.3.14 ofIFRS 9, the ability to build a term structure of zero-coupon real interestrates is only relevant to inflation-linked bonds in determining whetherinflation risk component is separately identifiable and reliably measurable.NoIASB QuestionHKAB Comments / Feedbackapplying the requirement in paragraph 6.9.16 and paragraph 102Y anddiscontinue hedge accounting prospectively from the date of thatreassessment.Paragraphs BC87–BC97 of the Basis for Conclusions describe the Board’sreasons for these proposals.Do you agree with these proposals? Why or why not? If you agree with onlyparts of the proposals, please specify what you agree and disagree with. If youdisagree with the proposals, please explain what you propose and why.The proposed wording in BC 87 and BC 88 may impact the existingapplication of the standard.
5.Effective date and transition (paragraphs 7.1.9 and 7.2.36–7.2.38 of the[Draft] amendments to IFRS 9 and paragraphs 108H–108J of the [Draft]amendments to IAS 39)
(a) The Exposure Draft proposes that the amendments would have an effectivedate of annual periods beginning on or after 1 January 2021. Earlierapplication would be permitted.(b) The Exposure Draft proposes that the amendments would be appliedretrospectively in accordance with IAS 8 Accounting Policies, Changes inAccounting Estimates and Errors, except as specified in (ii) below. Anentity would:
(i)
reinstate a discontinued hedging relationship if and only if theentity discontinued that hedging relationship solely due to changesrequired by interest rate benchmark reform and, therefore, theentity would not have been required to discontinue that hedgingrelationship if the amendments had been applied at that time.We agree with the proposal as it is reasonable in view of the urgency of theIBOR reform implementation and in line with the LIBOR transition’s effectivedate. Nonetheless, we suggest the IASB to consider below suggestions:
(i) Entities should be “permitted” but not “required” to reinstate thediscontinued hedging relationships that have failed solely due to the impactof IBOR reform. An entity may designate the hedging instrument in thediscontinued hedging relationship in a new hedging relationship and re-instating the original hedging relationship may cause the new hedgingrelationship to fail; and(ii) Provide further guidance on how the entities could demonstrate “withoutthe use of hindsight” in order to avoid confusion on the application ofreinstatement. We also seek clarification whether the “without use ofhindsight” requirement is also applicable when restating the openingposition on the first application date.NoIASB QuestionHKAB Comments / Feedback(ii)
not be required to restate prior periods to reflect the application ofthese amendments. However, the entity may restate prior periodsif, and only if, it is possible without the use of hindsight.Paragraphs BC110–BC115 of the Basis for Conclusions describe the Board’sreasons for these proposals.Do you agree with these proposals? Why or why not? If you agree with onlyparts of the proposals, please specify what you agree and disagree with. If youdisagree with the proposals, please explain what you propose and why.
6.Disclosures (paragraphs 24I–24J and paragraphs 44HH–44II of [Draft]amendments to IFRS 7)
The Exposure Draft proposes that entities provide specific disclosures in orderto provide information about:
(a) the nature and extent of risks arising from interest rate benchmark reformto which the entity is exposed, and how it manages those risks; and(b) the entity’s progress in completing the transition from interest ratebenchmarks to alternative benchmark rates, and how the entity is managingthat transition.Paragraphs BC105–BC109 of the Basis for Conclusions describe the Board’sreasons for this proposal.Do you agree with this proposal? Why or why not? If you disagree with theproposal, please explain what you propose and why.We agree with the proposal as the required disclosures provide a betterunderstanding for the reader of the financial statement on the related risk, theentity’s action and the transition progress. Nonetheless, we suggest the IASBto consider below suggestions:
(i) Provide illustrative examples of the proposed disclosures, especially on thechanges to an entity’s risk management strategy as required underparagraph 24J(d) where the current requirement is not specific to a pointthat enables entities to provide adequate information to comply with it; and(ii) Provide clarification that in the first year of adoption, entities are notrequired to disclose comparative information for the requirements underparagraph 24J(b).