The IASB has started work on a narrow-scope project on 'make-whole' prepayment options.
Work begins on a possible amendment to IFRS 9
The IASB has started its discussions on the classification under IFRS 9 of financial assets with symmetric ‘make-whole’ prepayment options, having agreed in December 2016 to add a narrow-scope project to its agenda.
“A narrow-scope exception for symmetric prepayment options may be welcomed by preparers but could also impact accounting for other prepayment features.”
At its January meeting, the Board discussed a possible narrow exception to IFRS 9 that would allow particular financial assets with symmetric make-whole prepayment options to be eligible for measurement at amortised cost or at fair value through other comprehensive income – depending on the business model.
The FICE and macro hedge accounting projects were not discussed during this meeting.
At the same meeting, the staff informed the Board that it should expect sweep issues from the fatal flaw review of IFRS 17 Insurance Contracts to be discussed at the February meeting. As a result, the staff now expect to publish the final insurance contracts standard in May 2017.
For more detail on these discussions, read Issue 36 of our IFRS Newsletter: Financial Instruments (PDF 494 KB).
The next steps for the project will be to:
The Board aims to issue a final amendment in the fourth quarter of 2017 – i.e. before IFRS 9 becomes effective.
© 2018 KPMG IFRG Limited is a UK company, limited by guarantee. All rights reserved. KPMG IFRG Limited, registered in England No 5253019. Registered office: 15 Canada Square, London, E14 5GL, UK.