12. October 2016

EFRAG’s Preliminary Consultation Document relating to the endorsement for use in the EU of IFRS 16

EFRAG has issued a Preliminary Consultation Document relating to the endorsement for use in the EU of IFRS 16 Leases. EFRAG is seeking the views of constituents, by 8 December 2016, on the specific matters raised in this document and any other issues considered relevant to EFRAG’s endorsement advice.

EFRAG’s overall preliminary assessment is that IFRS 16:
•    meets the qualitative characteristics of relevance, reliability, comparability and understandability required to support economic decisions and the assessment of stewardship, and raises no issues regarding prudent accounting (Appendix 2);
•    is not contrary to the true and fair view principle (Appendix 2);
•    would improve financial reporting, compared to the standard and the interpretations it replaces (Appendix 3); and
•    would not put European entities at a competitive disadvantage taking into account the lack of convergence with the equivalent US GAAP Standard (Appendix 3).

EFRAG has also prepared a preliminary assessment of the cost and benefits expected to arise from the application of IFRS 16 (Appendix 3). However, EFRAG has not yet assessed whether it would reach an acceptable cost-benefit trade-off.

EFRAG nonetheless encourages constituents to provide views on any matters that may be relevant to its endorsement advice. Some specific matters on which EFRAG is seeking input are highlighted in questions set out within this Preliminary Consultation Document.

The DRSC asks all german companies for their participation in this consultation. Feedback can be sent to the DRSC (preferably) – via eMail to zimniok@drsc.deor to EFRAG.

Comments are requested by 8 December 2016further information