3

Recognition and valuation of assets and liabilities other than technical provisions

3.1

The PRA expects firms to comply with each of the Guidelines in all cases unless they intend to take advantage of the derogation in Article 9 (4) of the Commission Delegated Regulation (EU) 2015/35 (‘the Delegated Regulation’) as it forms part of retained EU law.

3.2

This derogation lays down criteria which, if met, allow a firm to recognise and value an asset or liability based on the valuation method it uses in preparing its annual or consolidated financial statements.

3.3

Where firms intend to take advantage of the Article 9 (4) derogation as it forms part of retained EU law, they should still apply Guidelines 1, 2, 4, 5 and 8 to 11. They should also refer to SS38/15[7] in which the PRA sets out its conclusions as to which financial reporting standards (FRS) are consistent with the UK’s implementation of Article 75 of the Solvency II Directive (the Directive)[8] and therefore within the possible scope of the derogation.

Footnotes