Response 4 - KPMG

KPMG LLP Audit 15 Canada Square London E14 5GL United Kingdom Tel +44 (0) 20 7311 1000

Paul Lee Chair UK Endorsement Board 6th Floor 10 South Colonnade London E14 4PU

By email to: [email protected]

2 April 2026

Our ref CWA/MB

Dear Mr Lee

KPMG in the UK (“we”) welcome the opportunity to respond to the UK Endorsement Board's ("UKEB”) invitation to comment on the UKEB Draft Comment Letter ("Draft Letter") on the above mentioned IASB Exposure Draft.

We appreciate the IASB's efforts, in response to stakeholders' concerns, to reduce diversity in practice regarding the application of the fair value option to investments in associates and joint ventures.

We are part of a global network of firms. Views on IFRSs are developed globally by KPMG International Standards Group. The KPMG network of firms' response to the IASB consultation has not yet been finalised and will be provided publicly to the IASB in due course. In advance of the finalisation of global network views, the comments in this letter are the preliminary views of KPMG in the UK only.

Clarification of the fair value option

We understand that the amendments proposed by the IASB broaden the availability of the FV option to any entity that has a specified main business activity of investing in assets, including entities that do not hold financial assets. This appears to go beyond the original intention of the project, as outlined in the Basis for Conclusions, and we believe that extension of scope should be explicitly acknowledged, for example in application guidance and/or the Basis for Conclusions.

The broader scope is implicitly acknowledged in the UKEB's suggested wording in paragraph 3 of the Draft Letter. We agree that the UKEB's suggestion would provide a clearer articulation of when the fair value option could be taken, assuming a wider scope was the IASB's intention. However, deleting the existing reference to venture capital organisations, mutual funds or unit trusts may (however unlikely) inadvertently prevent an entity that currently takes the FV option from continuing with that accounting treatment. We understand that the amendments are intended to add entities that have a specified main business activity of investing in assets as an additional category of eligible entities without changing existing application. The IASB noted in BC10 of the Basis for Conclusions that 'the diversity in practice mainly... relates to the meaning of 'similar entities...' and the... amendments... should be limited to clarifying only these aspects'.

We have no other significant comments on the main observations and recommendations noted in the UKEB's Draft Letter.

Yours sincerely

KPMG LLP

KPMG LLP, a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Registered in England No OC301540 Registered office: 15 Canada Square, London, E14 5GL For full details of our professional regulation please refer to 'Regulatory information' under 'About' at www.kpmg.com/uk

CWA/MB