SOCPA Comments on Tentative Agenda Decisions of the IFRS Interpretations Committee
The International Interpretations Committee published three tentative decisions in response to inquiries received regarding the application of accounting standards. These inquiries included an inquiry about how to account for guarantee over a derivative contract, how to account for premiums receivable from an intermediary, and how to account for Homes and Home Loans Provided to Employees.
Represented by the Accounting Standards Council, SOCPA agrees with the conclusion of the committee pertaining to not issuing an explanation on how to account for guarantee over a derivative contract since the matters described in the request are not widespread, and when the matters do arise, the amounts involved are not material.
Further, SOCPA agrees with the IFRS Interpretations Committee’s conclusion of accounting for premiums receivable from an intermediary by giving the option to the insurer to account for premiums applying either IFRS 17 or IFRS 9, especially since the insurance companies are transitioning to the new standard and would not be necessary to provide new requirements to ensure a smooth transition.
As for homes and home loans provided to employees, SOCPA disagrees with the conclusion of the Committee that is not issuing an interpretation of how to account for these transactions. SOCPA is not supporting the decision due to the observed diversity in the method of accounting used by the entities when accounting for these transactions; the amounts involved are material. SOCPA also proposed to the Interpretations Committee to reconsider the subject and issue a clarification showing how to account for these transactions in a way that maintains the consistency of application. In addition, SOCPA made a number of proposals on how to account for these transactions.
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