The IASB extends the scope exclusion from IFRS 17 for some credit card contracts
Read PwC's observations from the January 30, 2020 IASB meeting where the IASB extends the scope exclusion from IFRS 17 for some credit card contracts and provides an accounting policy choice related to interim reporting.
Overview
On 30 January 2020, the IASB (‘Board’) tentatively decided to modify its proposals in the Exposure Draft so that IFRS 17 would be amended:
- to extend the scope of the proposed scope exclusion for credit cards, to apply also to other similar contracts that provide credit or payment arrangements, and to require that IFRS 17 would apply to the insurance coverage component of such contracts;
- to provide, at a reporting entity level, an accounting policy choice as to whether to change the treatment of accounting estimates made in previous interim financial statements when applying IFRS 17 in subsequent interim financial statements or in the annual reporting period; and
- to require an entity to identify, recognise and measure an asset for insurance acquisition cash flows at the transition date, and to specify how the modified retrospective approach and fair value approach would apply in determining that asset.
The Board also tentatively decided to retain, unchanged, the requirements in IFRS 17 relating to:
- insurance contracts acquired in their settlement period in a transfer of insurance contracts that do not form a business or in a business combination within the scope of IFRS 3, ‘Business Combinations’; and
- the prohibition from applying the risk mitigation option retrospectively.
The views in this In transition are based on our observations from the 30 January 2020 meeting, and they might differ in some respects from the official report of the meeting that will be published by the IASB in an IASB Update at a later date.
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