29 July 2021To:
Members of the Hong Kong Institute of CPAsAll other interested partiesINVITATION TO COMMENT ON IASB EXPOSURE DRAFTED/2021/8 Initial Application of IFRS 17 and IFRS 9 –Comparative Information (Proposed amendment to IFRS 17)
Comments to be received by 20 August 2021The Financial Reporting Standards Committee (FRSC) of the Hong Kong Institute of Certified PublicAccountants (Institute) is seeking comments on the IASB Exposure Draft ED/2021/8 Initial Applicationof IFRS 17 and IFRS 9 – Comparative Information (Proposed amendment to IFRS 17). The ExposureDraft (ED) is available on the Institute's website:
https://www.hkicpa.org.hk/en/Standards-and-regulation/Standards/Open-for-comment-documents/fredMany insurance entities will apply IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments forthe first time from 1 January 2023. However, some of these insurers have informed the IASB ofsignificant temporary accounting mismatches on initial application of the new Standards that canmake the change in accounting more difficult to communicate to investors.While IFRS 17 requires insurance entities to restate comparative information on initial application,restatement of comparatives on initial application of IFRS 9 is optional. In addition, if an entity doesrestate IFRS 9 information, it is prohibited from applying IFRS 9 to any assets derecognized beforethe initial application date. For some entities, the difference in transition requirements for IFRS 17and IFRS 9 may result in accounting mismatches between insurance contract liabilities and relatedfinancial assets. Moreover, if an entity chooses to restate comparative information for IFRS 9,classification differences may occur due to the resulting mixed measurement of financial assets.To alleviate these issues, the IASB has proposed a narrow-scope amendment to IFRS 17 to permitentities to apply an option to present comparative information for certain financial assets in a mannerconsistent with IFRS 9. This is in the form of an optional classification overlay for financial assets thatare related to insurance contract liabilities in the comparative period(s) in the initial application of IFRS17 and IFRS 9. The proposed amendment does not affect any other requirements in IFRS 17.The FRSC invites your comments on the ED by 20 August 2021 to allow your comments to beconsidered in developing its response to the IASB. Comments should be supported by specificreasoning and should be submitted in written form.Comments may be sent by mail, fax or e-mail to:
Standard Setting DepartmentHong Kong Institute of Certified Public Accountants37th Floor, Wu Chung House213 Queen’s Road EastWanchai, Hong KongFax number (+852) 2865 6776E-mail: commentletters@hkicpa.org.hkComments will be acknowledged and may be made available for public review unless otherwiserequested by the respondent.
Invitation to Comment on IASB Exposure Draft ED/2021/8 Initial Application of IFRS 17 and IFRS 9 – Comparative Information (Proposed amendment to IFRS 17)
下载原件29 July 2021To:
Members of the Hong Kong Institute of CPAsAll other interested partiesINVITATION TO COMMENT ON IASB EXPOSURE DRAFTED/2021/8 Initial Application of IFRS 17 and IFRS 9 –Comparative Information (Proposed amendment to IFRS 17)
Comments to be received by 20 August 2021The Financial Reporting Standards Committee (FRSC) of the Hong Kong Institute of Certified PublicAccountants (Institute) is seeking comments on the IASB Exposure Draft ED/2021/8 Initial Applicationof IFRS 17 and IFRS 9 – Comparative Information (Proposed amendment to IFRS 17). The ExposureDraft (ED) is available on the Institute's website:
https://www.hkicpa.org.hk/en/Standards-and-regulation/Standards/Open-for-comment-documents/fredMany insurance entities will apply IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments forthe first time from 1 January 2023. However, some of these insurers have informed the IASB ofsignificant temporary accounting mismatches on initial application of the new Standards that canmake the change in accounting more difficult to communicate to investors.While IFRS 17 requires insurance entities to restate comparative information on initial application,restatement of comparatives on initial application of IFRS 9 is optional. In addition, if an entity doesrestate IFRS 9 information, it is prohibited from applying IFRS 9 to any assets derecognized beforethe initial application date. For some entities, the difference in transition requirements for IFRS 17and IFRS 9 may result in accounting mismatches between insurance contract liabilities and relatedfinancial assets. Moreover, if an entity chooses to restate comparative information for IFRS 9,classification differences may occur due to the resulting mixed measurement of financial assets.To alleviate these issues, the IASB has proposed a narrow-scope amendment to IFRS 17 to permitentities to apply an option to present comparative information for certain financial assets in a mannerconsistent with IFRS 9. This is in the form of an optional classification overlay for financial assets thatare related to insurance contract liabilities in the comparative period(s) in the initial application of IFRS17 and IFRS 9. The proposed amendment does not affect any other requirements in IFRS 17.The FRSC invites your comments on the ED by 20 August 2021 to allow your comments to beconsidered in developing its response to the IASB. Comments should be supported by specificreasoning and should be submitted in written form.Comments may be sent by mail, fax or e-mail to:
Standard Setting DepartmentHong Kong Institute of Certified Public Accountants37th Floor, Wu Chung House213 Queen’s Road EastWanchai, Hong KongFax number (+852) 2865 6776E-mail: commentletters@hkicpa.org.hkComments will be acknowledged and may be made available for public review unless otherwiserequested by the respondent.