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Document 52016IP0381

European Parliament resolution of 6 October 2016 on International Financial Reporting Standards: IFRS 9 (2016/2898(RSP))

OJ C 215, 19.6.2018, p. 40–43 (BG, ES, CS, DA, DE, ET, EL, EN, FR, HR, IT, LV, LT, HU, MT, NL, PL, PT, RO, SK, SL, FI, SV)

19.6.2018   

EN

Official Journal of the European Union

C 215/40

P8_TA(2016)0381

International Financial Reporting Standards: IFRS 9

European Parliament resolution of 6 October 2016 on International Financial Reporting Standards: IFRS 9 (2016/2898(RSP))

(2018/C 215/08)

The European Parliament,

—

having regard to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (1),

—

having regard to the final draft of Commission Regulation (EU) …/… amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard 9,

—

having regard to International Financial Reporting Standard (IFRS) 9 on Financial Instruments issued on 24 July 2014 by the International Accounting Standards Board (IASB), to the endorsement advice of the European Financial Reporting Advisory Group (EFRAG) on IFRS 9 (2), to EFRAG’s assessment of IFRS 9 against the true and fair view principle, and to the comment letters from the European Central Bank (ECB) and European Banking Authority (EBA) on the endorsement of IFRS 9,

—

having regard to the amendments to IFRS 4 issued on 12 September 2016 by the IASB under the title ‘Applying IFRS 9 “Financial Instruments” with IFRS 4 “Insurance Contracts”’,

—

having regard to the October 2013 report by Philippe Maystadt entitled “Should IFRS standards be more European?”,

—

having regard to the G20 Leaders’ Statement of 2 April 2009,

—

having regard to the report of the High-Level Group on Financial Supervision in the EU, chaired by Jacques de Larosière, of 25 February 2009,

—

having regard to its resolution of 7 June 2016 on International Accounting Standards (IAS) evaluation and the activities of the International Financial Reporting Standards (IFRS) Foundation, the European Financial Reporting Advisory Group (EFRAG) and the Public Interest Oversight Board (PIOB) (3),

—

having regard to the letter of 8 January 2016 from its Committee on Economic and Monetary Affairs to the Chair of the European Systemic Risk Board (ESRB) concerning ‘The financial stability implications of the introduction of IFRS 9 — Request for analysis’ and the response letter of 29 February 2016,

—

having regard to the letter of 16 June 2016 from its Committee on Economic and Monetary Affairs to the Commissioner for Financial Stability, Financial Services and Capital Markets Union concerning the IFRS 9 endorsement and to the response letter of 15 July 2016,

—

having regard to the studies for its Committee on Economic and Monetary Affairs on IFRS 9 (‘IFRS Endorsement Criteria in Relation to IFRS 9’, ‘The Significance of IFRS 9 for Financial Stability and Supervisory Rules’, ‘Impairments of Greek Government Bonds under IAS 39 and IFRS 9: A Case Study’ and ‘Expected-Loss-Based Accounting for the Impairment of Financial Instruments: the FASB and IASB IFRS 9 Approaches’),

—

having regard to the question to the Commission on International Financial Reporting Standards: IFRS 9 (O-000115/2016 — B8-0721/2016),

—

having regard to the motion for a resolution of the Committee on Economic and Monetary Affairs,

—

having regard to Rules 128(5) and 123(2) of its Rules of Procedure,

A.

whereas the global financial crisis brought the role played by international financial reporting standards (IFRS) in financial stability and growth, in particular the rules regarding the recognition of losses incurred in the banking system, onto the G20 and EU agendas; whereas the G20 and the de Larosière report highlighted key issues with respect to accounting standards ahead of the crisis, including pro-cyclicality related to the mark-to-market principle and profit and loss recognition, the underestimation of risk accumulation during cyclical upturns and the lack of a common and transparent methodology for the valuation of illiquid and impaired assets;

B.

whereas the International Accounting Standards Board (IASB) issued IFRS 9 — Financial Instruments as a key response to some aspects of the financial crisis and to its impact on the banking sector; whereas IFRS 9 will be effective from 1 January 2018 and replaces IAS 39;

C.

whereas EFRAG issued a positive endorsement advice on IFRS 9 with a number of observations concerning the use of ‘fair value’ in stressed market conditions, the lack of a conceptual basis regarding the 12-month loss provisioning approach and unsatisfactory provisions pertaining to long-term investment; whereas, owing to the different effective dates of IFRS 9 and the forthcoming new insurance standard IFRS 17, the advice expressed a reservation on the applicability of the standard to the insurance sector;

D.

whereas the controversy and debate on the impact of fair value accounting on long-term investment is accentuated by the absence of a quantitative impact assessment on the subject;

E.

whereas the recognition of unrealised gains under fair value accounting might be considered a violation of the Capital Maintenance Directive and the Accounting Directive; whereas the Commission is currently undertaking a comparison of Member States’ practices with regard to dividend distribution;

F.

whereas the principle of prudence must be the key guiding principle for any accounting standard;

G.

whereas the new standard appears to be equally if not more complex than its predecessor IAS 39; whereas the initial goal was to reduce complexity;

H.

whereas the upcoming new insurance standard IFRS 17, which replaces IFRS 4, is likely to be effective after 2020; whereas concerns have been raised about the misalignment of the effective dates of IFRS 9 and IFRS 17; whereas the IASB issued the final amendments to IFRS 4 in September 2016, offering two optional solutions: the overlay approach and a temporary exemption at reporting entity level;

I.

whereas its Committee on Economic and Monetary Affairs has scrutinised IFRS 9 — Financial Instruments by conducting a public hearing, commissioning four studies on IFRS 9, and organising scrutiny activities in committee and the activities of its IFRS Permanent Team;

1.

 Notes that IFRS 9 — Financial Instruments constitutes one of the major responses of the IASB to the financial crisis; notes that implementation efforts are already in progress;

2.

 Acknowledges that IFRS 9 constitutes an improvement on IAS 39 insofar as the move from an ‘incurred loss’ to an ‘expected loss’ impairment model addresses the problem of ‘too little, too late’ in the loan loss recognition procedure; notes, however, that IFRS 9 calls for a great deal of judgement in the accounting process; underlines that there are huge differences of opinion and little concrete guidance from auditors in this respect; calls, therefore, for guidance to be developed by the European Supervisory Authorities in cooperation with the Commission and EFRAG in order to prevent any abuse of management discretion;

3.

 While not opposing the Commission regulation amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard 9, recalls the requests made regarding IFRS 9 in its aforementioned resolution of 7 June 2016;

4.

 Recalls that the better regulation approach requires an impact assessment; notes the absence of a proper quantitative impact assessment for IFRS 9 which is due in part to a lack of reliable data; underlines the need to gain a better understanding of the impact of IFRS 9 on the banking sector, the insurance sector and the financial markets in general, but also on the financial sector as a whole; reiterates, therefore, its request to the IASB and EFRAG to strengthen their impact analysis capacity, notably in the field of macroeconomics;

5.

 Reiterates the request of its Committee on Economic and Monetary Affairs to the ESRB for an analysis of the financial stability implications of the introduction of IFRS 9; recalls the ESRB’s commitment to respond to this request in the course of 2017; welcomes the fact that the ESRB has established a new task force on IFRS 9; recalls the Maystadt recommendations regarding the expansion of the ‘public good’ criterion, i.e. that accounting standards should neither jeopardise financial stability in the EU nor hinder the EU’s economic development;

6.

 Notes the importance of fully understanding the interaction of IFRS 9 with other regulatory requirements; welcomes the ongoing EBA assessment of IFRS 9’s impact on banks in the EU, aimed at gaining a better understanding of its effect on regulatory own funds, its interaction with other prudential requirements and the way in which institutions are preparing for the application of IFRS 9; notes that banks using the Standardised Approach would probably be the most seriously affected by a reduction in their Core Equity Tier 1 capital; calls on the Commission, therefore, to propose appropriate steps in the prudential framework by the end of 2017, e.g. to insert into the Capital Requirements Regulation a progressive phase-in regime that will mitigate the impact of the new impairment model for a three-year period, or until an adequate international solution has been put in place, and avoid any sudden unwarranted impact on banks’ capital ratios and lending;

7.

 Notes the misalignment of the effective dates of IFRS 9 and the upcoming new insurance standard IFRS 17; notes that the IASB has issued amendments to IFRS 4 addressing some of the concerns, notably relating to the use of the optional deferral approach; calls on the Commission to carefully address this issue in a satisfactory and adequate manner, with the support of EFRAG, ensuring a proper level playing field within the EU;

8.

 Underlines the importance of long-term investment for economic growth; is concerned that accounting treatment under IFRS 9 of certain financial instruments held directly or indirectly as long-term investments, in particular equity, could go against the overall aim of promoting long-term investment; calls on the Commission to make sure that IFRS 9 serves the EU’s long-term investment strategy and reduces pro-cyclicality and incentives for excessive risk-taking; calls on the Commission to come forward with an evaluation no later than December 2017;

9.

 Welcomes the Commission’s current initiative to compare Member States’ practices with regard to dividend distribution; calls on the Commission to ensure compliance of IFRS 9 with the Capital Maintenance Directive and the Accounting Directive and to cooperate wherever necessary with the IASB and national and third-country standard setters in order to obtain their support for modifications or, in the absence of such support, to provide in EU law for appropriate changes;

10.

 Calls on the Commission, together with the European Supervisory Agencies (ESAs), the ECB, the European Systemic Risk Board (ESRB) and EFRAG, to closely monitor the implementation of IFRS 9 in the EU, to prepare an ex post impact assessment no later than June 2019 and to present this assessment to the European Parliament and act in accordance with its views;

11.

 Calls on the IASB to conduct a post-implementation review (PIR) of IFRS 9 in order to identify and assess unintended effects of the standard, in particular on long-term investment;

12.

 Instructs its President to forward this resolution to the Commission.

(1)  OJ L 243, 11.9.2002, p. 1.

(2)  http://www.efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FEndorsement%2520Advice%2520on%2520IFRS%25209.pdf.

(3)  Texts adopted, P8_TA(2016)0248.

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