The FRC state that outreach by the Interpretations Committee and IASB staff has highlighted that there is significant diversity in applying paragraph 25 of IAS 1. They go on to state that staff papers have noted that some consider disclosure of material uncertainties are only required when it is no longer to appropriate to adopt the going concern basis of accounting. However, others consider that the trigger for making such disclosures is the identification of possible future events and conditions that may cast significant doubt upon an entity’s ability to continue as a going concern. The FRC believe that only the latter interpretation could result in relevant and timely disclosures that provide useful information.

The FRC believes that this perceived diversity will remain if the tentative agenda decision is finalised as currently drafted and that in the absence of a narrow scope amendment to address more fully the disclosure requirements, the need for an interpretation that directly addresses the diversity remains. In particular, the FRC considers that the Interpretations Committee should clarify that the hurdle for making disclosures on material uncertainties must be lower than the hurdle for not adopting the going concern basis of accounting, if such disclosures are to be relevant and timely and thereby useful.

Click for the FRC's comment letter (link to FRC website).