IAS 8 — Effective date and transition methods (IASB only)
In May 2012, the IASB decided to give relief from IAS 8.28(f) on initial application of IFRS 10 Consolidated Financial Statements having assessed that the cost of meeting that requirement was likely to exceed the benefits. At that meeting, the IASB also discussed IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and tentatively agreed to remove the requirement in IAS 8.28(f) when the change is a result of a change in an IFRS. Instead, the IASB would decide on a case-by-case basis whether additional disclosures are needed when transition provisions for a new or amended IFRS do not require retrospective application rather than as part of IAS 8.
During the balloting process, there were a number of IASB members dissenting to the proposal. One of the reasons was that removal of IAS 8.28(f) was seen as removing what they saw as an appropriate default position and this may lead to inconsistent transition requirements for each project as such transition requirements would now be required to be developed for each project.
Some IASB members also expressed a concern that the change would move IFRS away from US GAAP. The FASB had modified the US GAAP requirements to converge with IFRS.
The IASB has demonstrated that it is willing to make exceptions to IAS 8 if it determines that the costs of applying IAS 8 are likely to exceed the benefits. In addition to the relief on transition for IFRS 10 and IFRS 9 Financial Instruments, the IASB tentatively decided in October 2011 to provide similar relief in the leases project.
The staff paper discussed whether the proposed changes to IAS 8 (i.e., removal of the requirement in 8.28(f)) were still required in light of the exceptions made by the IASB and the concerns of the dissenting IASB members during the ballot process.
The staff recommended that the ballot draft be withdrawn and the narrow scope project removed from the IASB work plan.
The staff noted that certain other issues that arose as a result of the dissenting IASB members could be addressed at the upcoming disclosure forum (next Board meeting week) and comparability, key to IAS 8, could be considered as part of the presentation and disclosure chapters in the Conceptual Framework project.
All Board members tentatively agreed with the staff recommendations.