Issue 68 - IFRS News in Brief

7 March 2017


The following is a summarised update on the main tentative decisions taken by the IASB at its meeting on 22-23 February 2017.

For more detailed and comprehensive information on the IASB’s discussions:     

Insurance Contracts (IFRS 17 due May 2017)

  • Under the general model, all changes in estimates of the present value of future cash flows arising from non-financial risks will be adjusted against the contractual service margin (CSM).
  • Under the variable fee approach, all changes in estimates of the present value of future cash flows that are unrelated to the underlying items and that arise from non-financial risks will be adjusted against the CSM.
  • Changes in estimates adjusted against the CSM include changes directly caused by experience adjustments, except for (i) changes relating to incurred claims, and (ii) increases in estimates exceeding the carrying amount of the CSM, or decreases allocated to a loss component.
  • The definition of an experience adjustment should exclude investment components.
  • For a group of insurance contracts, the amount of the CSM recognised in profit or loss in each period is to be determined by allocating the carrying amount of the CSM after all other adjustments have been made to the carrying amount of the CSM at the start of the period.
  • An entity should be exempt from the requirement to divide a portfolio into groups of contracts (onerous at inception, not significantly likely to be onerous, and other contracts) if, and only if, such division would have resulted from specific constraints in law or regulation on an entity’s practical ability to set price or benefit levels that vary according to policyholder characteristics.

Financial Instruments with Characteristics of Equity (discussion paper due H2/2017)

The main decision resulting from the Board’s discussions is that an entity should apply the Gamma approach[1] to the contractual terms of a financial instrument consistently with IAS 32 and IFRS 9.

Other topics discussed for which no major decisions were made

  • Revised Conceptual Framework: finalisation and due process
  • Post-implementation review of IFRS 13 (Request for Information expected May 2017): due process
  • Classification of instruments that contain symmetric prepayment options: due process to amend IFRS 9
  • Rate-regulated Activities: discussion of a new accounting model
  • Modifications and exchanges of financial liabilities under IFRS 9: no Interpretation needed in this respect


12 April 2017

ED/2017/1 - Annual Improvements to IFRS Standards 2015–2017 Cycle


[1] The Gamma model distinguishes claims between liabilities and equity based on the timing of transfer of the economic resources and on how the amount of the claim is determined: equity is an obligation to transfer economic resources only at liquidation, and for a residual amount;  a liability is an obligation to transfer economic resources at particular points in time other than at liquidation, or for a specified amount independent of the entity’s economic resources.


International Financial Reporting Standards

Insurance Contracts

Financial Instruments

IASB International Accounting Standards Board