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THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union,
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), and in particular Article 3(1) thereof,
Whereas:
(1) By Commission Regulation (EC) No 1126/2008(2) certain international standards and interpretations that were in existence at 15 October 2008 were adopted.
(2) On 7 October 2010, the International Accounting Standards Board (IASB) published Amendments to IFRS 7 Financial Instruments: Disclosures –Transfers of Financial Assets, hereinafter "the Amendments". The Amendments aim to help users of financial statements better evaluate the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position. Their objective is to promote transparency in the reporting of transfer transactions, particularly those that involve securitisation of financial assets.
(3) The consultation with the Technical Expert Group (TEG) of the European Financial Reporting Advisory Group (EFRAG) confirms that the Amendments meet the technical criteria for adoption set out in Article 3(2) of Regulation (EC) No 1606/2002. In accordance with Commission Decision 2006/505/EC of 14 July 2006 setting up a Standards Advice Review Group to advise the Commission on the objectivity and neutrality of the European Financial Reporting Advisory Group's (EFRAG’s) opinions(3), the Standards Advice Review Group considered EFRAG's opinion on endorsement and advised the Commission that it is well-balanced and objective.
(4) Regulation (EC) No 1126/2008 should therefore be amended accordingly.
(5) The measures provided for in this Regulation are in accordance with the opinion of the Accounting Regulatory Committee,
HAS ADOPTED THIS REGULATION:
The Annex to Regulation (EC) No 1126/2008 is amended as follows:
International Financial Reporting Standard (IFRS) 7 Financial Instruments: Disclosures is amended as set out in the Annex to this Regulation;
IFRS 1 First-time Adoption of International Financial Reporting Standards is amended in accordance with the amendments to IFRS 7 as set out in the Annex to this Regulation.
Each company shall apply the amendments referred to in Article 1 as from the commencement date of its first financial year starting after 30 June 2011.
This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Union.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 22 November 2011.
For the Commission
The President
José Manuel Barroso
IFRS 7 | Amendments to IFRS 7 Financial Instruments: Disclosures – Transfers of Financial Assets |
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transfers the contractual rights to receive the cash flows of that financial asset; or
retains the contractual rights to receive the cash flows of that financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients in an arrangement.
to understand the relationship between transferred financial assets that are not derecognised in their entirety and the associated liabilities; and
to evaluate the nature of, and risks associated with, the entity’s continuing involvement in derecognised financial assets.
normal representations and warranties relating to fraudulent transfer and concepts of reasonableness, good faith and fair dealings that could invalidate a transfer as a result of legal action;
forward, option and other contracts to reacquire the transferred financial asset for which the contract price (or exercise price) is the fair value of the transferred financial asset; or
an arrangement whereby an entity retains the contractual rights to receive the cash flows of a financial asset but assumes a contractual obligation to pay the cash flows to one or more entities and the conditions in paragraph 19(a)–(c) of IAS 39 are met.
the nature of the transferred assets;
the nature of the risks and rewards of ownership to which the entity is exposed;
a description of the nature of the relationship between the transferred assets and the associated liabilities, including restrictions arising from the transfer on the reporting entity’s use of the transferred assets;
when the counterparty (counterparties) to the associated liabilities has (have) recourse only to the transferred assets, a schedule that sets out the fair value of the transferred assets, the fair value of the associated liabilities and the net position (the difference between the fair value of the transferred assets and the associated liabilities);
when the entity continues to recognise all of the transferred assets, the carrying amounts of the transferred assets and the associated liabilities;
when the entity continues to recognise the assets to the extent of its continuing involvement (see paragraphs 20(c)(ii) and 30 of IAS 39), the total carrying amount of the original assets before the transfer, the carrying amount of the assets that the entity continues to recognise, and the carrying amount of the associated liabilities.
the carrying amount of the assets and liabilities that are recognised in the entity’s statement of financial position and represent the entity’s continuing involvement in the derecognised financial assets, and the line items in which the carrying amount of those assets and liabilities are recognised;
the fair value of the assets and liabilities that represent the entity’s continuing involvement in the derecognised financial assets;
the amount that best represents the entity’s maximum exposure to loss from its continuing involvement in the derecognised financial assets, and information showing how the maximum exposure to loss is determined;
the undiscounted cash outflows that would or may be required to repurchase derecognised financial assets (eg the strike price in an option agreement) or other amounts payable to the transferee in respect of the transferred assets. If the cash outflow is variable then the amount disclosed should be based on the conditions that exist at each reporting date;
a maturity analysis of the undiscounted cash outflows that would or may be required to repurchase the derecognised financial assets or other amounts payable to the transferee in respect of the transferred assets, showing the remaining contractual maturities of the entity’s continuing involvement;
qualitative information that explains and supports the quantitative disclosures required in (a)–(e).
the gain or loss recognised at the date of transfer of the assets;
income and expenses recognised, both in the reporting period and cumulatively, from the entity’s continuing involvement in the derecognised financial assets (eg fair value changes in derivative instruments);
if the total amount of proceeds from transfer activity (that qualifies for derecognition) in a reporting period is not evenly distributed throughout the reporting period (eg if a substantial proportion of the total amount of transfer activity takes place in the closing days of a reporting period):
when the greatest transfer activity took place within that reporting period (eg the last five days before the end of the reporting period);
the amount (eg related gains or losses) recognised from transfer activity in that part of the reporting period; and
the total amount of proceeds from transfer activity in that part of the reporting period.
An entity shall provide this information for each period for which a statement of comprehensive income is presented.
Paragraph 44M is added.
After paragraph B28, headings and paragraphs B29–B39 are added.
not later than one month;
later than one month and not later than three months;
later than three months and not later than six months;
later than six months and not later than one year;
later than one year and not later than three years;
later than three years and not later than five years; and
more than five years.
a description of how the entity manages the risk inherent in its continuing involvement in the derecognised financial assets;
whether the entity is required to bear losses before other parties, and the ranking and amounts of losses borne by parties whose interests rank lower than the entity’s interest in the asset (ie its continuing involvement in the asset);
a description of any triggers associated with obligations to provide financial support or to repurchase a transferred financial asset.
Paragraph 39F is added.
Paragraph E4 and a footnote are added.
Paragraph E4 was added as a consequence of Disclosures—Transfers of Financial Assets (Amendments to IFRS 7) issued in October 2010. To avoid the potential use of hindsight and to ensure that firsttime adopters are not disadvantaged as compared with current IFRS preparers, the Board decided that first-time adopters should be permitted to use the same transition provisions permitted for existing preparers of financial statements prepared in accordance with IFRSs that are included in Disclosures—Transfers of Financial Assets (Amendments to IFRS 7).