ESMA Uploads the Letter Issued to the IFRS Interpretations Committee on its Site

The ESMA has uploaded a letter containing comments from it on its site. The letter has been issued to the International Financial Reporting Standards Interpretations Committee and basically revolves around the agenda related decision on International Accounting Standard 39 'Financial Instruments: Recognition and Measurement' as well as accounting for numerous characteristics of restructuring the GGBs (Greek government bonds).

While the letter was written on 26h July, the European Securities and Markets Authority has published it only now.

In the month of April 2012, the European Securities and Markets Authority had requested the IFRS Interpretations Committee to give clarifications on accounting of Greek sovereign debt exposure stating that IAS 39 Financial Instruments: Recognition and Measurement failed to provide a lot of guidance on this matter. ESMA had then written that this is making it difficult to comprehend the application of accounting standard and hence could give rise to enforceability related issues.

Post the Interpretations Committee’s tentative decision of not adding the matter to its schedule for the month of May 2012, ESMA resolved to publish the original letter that also consisted of numerous accounting related treatments that were suggested in a bid to emphasize the point made by it.

Currently, ESMA has published its letter regarding the provisional agenda related decision where it has stressed on its point of view all over again.

Europe based enforcers of International Financial Reporting Standards noted different accounting related methods for restructuring of debt by lenders in the absence of proper guidance that further results in reduced comparability between finance related statements.

European Securities and Markets Authority haven’t agreed to Committee’s decision regarding not adding the matter to its active agenda as well as not recommending the IFRS Interpretations Board to carry out work further. Instead ESMA is now encouraging the International Accounting Standards Board to look into the issues that have been raised.

ESMA has requested the committee to provide proper guidance with regard to restructuring the Greek Government Bonds. ESMA also wants to find out whether this restructuring will lead to derecognition of entire financial asset or merely a portion of the asset.