5.3 Amendments to the applied IFRS
5.3.1. Standards, interpretations and amended standards effective from 1 January 2020
The following changes in standards were applied to the consolidated financial statements.
| Name of standard/ interpretation | Approving regulation | Comments |
| Amendments to the framework | 2019/2075 | The amended conceptual assumptions contain several new concepts pertaining to measurement, they incorporate the updated definitions and criteria for recognizing assets and liabilities and the guidelines for reporting financial results. Additionally, they contain explanations pertaining to important areas such as the role of management, prudence and the uncertainty of measurement in financial statements. The amendments did not have a significant influence on the PZU Group’s consolidated financial statements. |
| Amendments to IAS 1 and IAS 8 – definition of materiality | 2019/2104 | According to the new definition, information is material if one may justifiably expect that if it is overlooked, distorted or concealed this may affect the decisions made by the main users of financial statements on the basis of these financial statements. The change did not exert a significant influence on the PZU Group’s consolidated financial statements. |
| Amendments to IFRS 9 and IFRS 7 – reform of the interest rate benchmarks (IBOR) | 2020/34 | This amendment requires the preparation of qualitative and quantitative disclosures to enable users of financial statements to understand how the entity’s hedging relationships are affected by uncertainty arising from the benchmark interest rate reform. The amendments introduce temporary exceptions from applying specific hedge accounting requirements in such a way that the reform of interest rate benchmarks does not result in the termination of hedge relations. The key exceptions apply to the requirements that the cash flows are “highly probable”, risk components, prospective assessments, retrospective effectiveness assessments and reclassification of the cash flow hedge provision. The PZU Group applied an exemption resulting from the amended standards and did not verify the effectiveness of the hedging relationships. |
| Amendment to IFRS 3 – Business combinations | 2020/551 | The amendments aim to state precisely the difference between the acquisition of a business and an asset acquisition. The amendments did not affect the PZU Group’s consolidated financial statements. |
| Amendment to IFRS 16 – payment modifications due to the COVID-19 pandemic | 2020/1434 | This amendment permits a lessee to treat all changes in lease payments arising from arrangements as if they did not constitute a modification of the lease, without making the judgments required by the standard. The payment modifications in question must be a direct consequence of the COVID-19 pandemic. The change did not affect the PZU Group’s consolidated financial statements. |
5.3.2. Standards, interpretations and amended standards not yet effective
- Approved by the regulation of the European Commission
| Name of standard/ interpretation |
Effective date | Approving regulation | Comments |
| Amendments to IFRS 4 – Extension of the temporary exemption from the application of IFRS 9 | 1 January 2021 | 2020/2097 | The amendment has extended the temporary exemption from the application of IFRS 9 by two years (postponing the expiration date of the exemption from the annual periods beginning on 1 January 2021 to the annual periods beginning on or after 1 January 2023 – in compliance with the effective date of IFRS 17 ‘Insurance contracts’), while leaving the option of an earlier implementation. The amendment is a consequence of the amendments to IFRS 17 published on 25 June 2020. It will not apply to the PZU Group due to the implementation of IFRS 9 at the beginning of 2018. |
| Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Reform of the interest rate benchmarks (IBOR - phase 2) | 1 January 2021 | 2021/25 | The key amendments stipulate that:
The PZU Group is currently analyzing the impact of these amendments on its consolidated financial statements. |
- Not approved by the European Commission:
| Name of standard/ interpretation |
Date of issue by IASB | Effective date (according to IASB) | Comments |
| IFRS 17 – Insurance contracts | 18 May 2017 25 June 2020 (amendments to the standard) |
1 January 2023 |
The purpose of the standard is to establish the uniform accounting policy for all types of insurance contracts, including the reinsurance contracts held by the insurer. Introduction of this unified standard should ensure comparability of financial reports between different entities, states and capital markets.
The new standard defines insurance contract as a contract under which one entity accepts significant insurance risk from the policyholder by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder.
The scope of the standard does not cover, among others, investment contracts, product warranties, loan guarantees, catastrophe bonds and weather derivatives (contracts requiring payment based on the climatic, geological factor or another physical variable that is not specific to the party to the contract).
The standard introduces a definition of contract boundary, defining its beginning as the beginning of coverage, the date when first premium becomes due, the moment when facts and circumstances indicate that the contract belongs to the group of onerous contracts - whichever is earliest. The end of the contract boundary occurs when the insurer has the right or practical ability to reassess the risk for a particular policyholder or a policy group, and the premium measurement does not cover the risk related to future periods.
In accordance with IFRS 17, contracts will be measured by one of the following methods:
On 25 June 2020, the IASB published amendments to IFRS 17, the most important of which was to defer the implementation of the standard until 1 January 2023. In addition to the detailed clarifications on distinct types of insurance contracts, the amendment also introduced the possibility of modifying actuarial estimates related to the implementation of IFRS 17 in subsequent interim financial statements or in the annual report (requirement of consistent application at the reporting entity’s level) and simplified the principles of presenting contracts in the statement of financial position, permitting the aggregation of assets or liabilities at the portfolio level rather than for separate contract groups. In mid-2018, the PZU Group formally launched project work to implement a standard in all PZU Group insurance companies. As part of the project, PZU Group is working on the following, among other things:
As at the date of conveying these consolidated financial statements, the European Commission has not endorsed the standard and the IASB is continuing its efforts aimed at giving the standard its final shape. The PZU Group is carrying out project work related to the implementation of the standard. At the present stage of the IFRS 17 implementation project, it is impossible to estimate the effect of application of IFRS 17 on the PZU Group’s comprehensive income and equity. |
| Amendment to IAS 1 – classifying liabilities as current and non-current | 23 January 2020 | 1 January 2023 | The amendments specify that the conditions which exist at the end of the reporting period are those which will be used to determine if a right to defer settlement of a liability exists and also that the intentions or expectations of an entity regarding the willingness to use the possibility of deferring a liability are not relevant for the classification. The amendments will not affect the PZU Group’s consolidated financial statements. |
| Amendments to IFRS 3 | 14 May 2020 | 1 January 2022 | The amendments include:
The amendment will not affect the PZU Group’s consolidated financial statements. |
| Amendment to IAS 16 – Property, plant and equipment: revenue obtained before putting into use | 14 May 2020 | 1 January 2022 | The amendment forbids any deduction from the initial value of property, plant and equipment of amounts obtained from the sale of products produced in the course of bringing an asset to a condition where it is fit for use as intended (from test production). Such proceeds from sales and related costs will be recognized in the profit or loss. The amendment will not affect the PZU Group’s consolidated financial statements to any significant extent. |
| Amendment to IAS 37 – Onerous contracts – costs of fulfillment of contractual obligations | 14 May 2020 | 1 January 2022 | The amendments define what costs should be taken into account when deciding whether or not the contract in question is an onerous contract. The amendments specify that “contract performance costs” are costs directly related to the contract which include:
The amendment will not affect the PZU Group’s consolidated financial statements to any significant extent. |
| Amendments to IFRS 2018-2020 | 14 May 2020 | 1 January 2022 | The amendments pertain to:
The amendments will not exert a material influence on the PZU Group’s consolidated financial statements. |
| Amendments to IAS 1 – Presentation of Financial Statements | 12 February 2021 | 1 January 2023 | In accordance with the amendments, the entity will be obligated to disclose material accounting policy information rather than significant accounting principles (as previously). The amendment contains examples of identification of material accounting policies and stipulates that an accounting policy may be material due to its nature, even if the figures are immaterial. An accounting policy is material if the users of the financial statements need it to understand other material information in such statements. Disclosure of immaterial accounting policies may not obscure material accounting policies. The amendment will not affect the PZU Group’s consolidated statements to any significant extent. |
| Amendments to IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors | 12 February 2021 | 1 January 2023 | The amendments to IAS 8 comprise:
The amendment will not affect the PZU Group’s consolidated statements to any significant extent. |
| Amendment to IFRS 16 – payment modifications due to the COVID-19 pandemic after 30 June 2021 | 11 February 2021 | 1 April 2021 | The amendment makes it possible to extend the possibility of treating changes pertaining to lease payments under granted arrangements as if they did not constitute a modification of lease on all payments due on or before 30 June 2022 (currently the arrangement pertains only to payments due by 30 June 2021). The amendment should be applied retrospectively, recognizing the cumulative effect as a correction of the opening balance of retained earnings or other capital component as at the beginning of the annual period in which the amendment was applied. The amendment will not affect the PZU Group’s consolidated statements to any significant extent. |
In summary, in the opinion of the PZU Group, the introduction of the above standards and interpretations (except for IFRS 17) will have no material effect on the accounting policies applied by the PZU Group.