EFRAG draft comment letter on onerous contracts – proposed amendments to IAS37
Released 25 January 2019
The European Financial Reporting Advisory Group (EFRAG) has published its draft comment letter in response to the International Accounting Standard Board (IASB) Exposure Draft 2018/2.
In the draft comment letter on the IASB's Exposure Draft 2018/2 Onerous Contracts - Cost of Fulfilling a Contract - Proposed amendments to IAS 37, EFRAG welcomes the IASB’s efforts to clarify the requirements in IAS 37 regarding the assessment of whether, in a contract, the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. However, EFRAG notes that the proposed amendments would affect the onerous assess ment not only for long-term construction contracts previously in the scope of IAS 11 but for all contracts in the scope of IAS 37. Consequently, EFRAG encourages the IASB to further assess the expected impact of the proposals. EFRAG also requests constituents to explain what is their perceived impact of the proposals that should be considered by the IASB when finalising the amendments. Comments on EFRAG's draft comment letter should be submitted by 5 April 2019.