The European Union’s Accounting Regulatory Committee has voted to recommend that the European Commission adopt the International Accounting Standards Board’s (IASB) proposed new financial instruments standard, International Financial Reporting Standard 9 (IFRS 9).
The 27 June vote means the new financial instruments standard has now cleared its penultimate endorsement hurdle.
All that stands between the new standard and its endorsement for application across the 28-nation European Union is a green light from the European Commission.
The Commission is widely tipped to give the final go-ahead.
News of the ARC vote came in an updated status report from the European Financial Reporting Advisory Group.
The ARC provides the European Commission with its opinions on proposals relating to the adopting of IFRSs under Article 3 of the IAS Regulation.
The committee is made up of representatives drawn from the bloc’s member states, and it is chaired by the European Commission.
Final endorsement of the new standard is now pencilled in for the end of the year.
Listed companies throughout the EU, including banks, will apply IFRS for annual reporting periods beginning on or after 1 January 2018.
The IASB launched its IFRS 9 project in 2009 in response to calls for it to reduce complexity in financial reporting and fix impairment.
Critics of the board’s existing impairment rules in IAS 39 argue that its incurred-loss impairment model has meant banks have delayed recognition of losses on impaired assets.
Among the most vocal critics of both IAS 39 and IFRS 9 has been the Local Authority Pension Fund Forum.
The European Parliament has yet to endorse the new standard.
Back in September 2015, IPE reported that well-placed sources close to the issue did not expect the Parliament to block IFRS 9 – despite recent sabre-rattling.
Speaking on the condition of anonymity, the sources revealed that, rather than reject IFRS 9 in its entirety, the Parliament would instead vote on a non-binding own-initiative resolution of its ECON Committee that could be highly critical of both the IFRS Foundation and the IASB’s standards.
Earlier this month, the Parliament’s Committee on Economic and Monetary Affairs issued a highly damning report on the London and Delaware-based foundation and board.