At its meeting on May 20, 2020, the IASB discussed the sweep issues identified during the balloting process of the amendments to IFRS 17. The Board tentatively decided to:

1. require an entity to include in the initial measurement of the contractual service margin of a group of insurance contracts the effect of the derecognition of any asset or liability for cash flows related to that group that was recognized before the group is recognized;
2. require an entity, when another IFRS Standard requires it to recognize a liability for future insurance acquisition cash flows before it recognizes the related group of insurance contracts, to also recognize an asset for those cash flows;
3. require an entity to use a systematic and rational method of allocation to apply the requirements in IFRS 17 relating to the recovery of losses from reinsurance contracts held when the entity groups together underlying onerous insurance contracts that are covered by a reinsurance contract held and other onerous insurance contracts the entity issues;
4. require an entity to recognize insurance revenue when the entity recognizes in profit or loss amounts related to income tax that are specifically chargeable to the policyholder under the terms of an insurance contract;
5. include in the definitions of the liability for remaining coverage and the liability for incurred claims all obligations arising from insurance contracts issued by an entity; and
6. amend paragraph B96(c) of IFRS 17 to clarify the treatment of insurance finance income or expenses relating to investment components that are paid in a period when they were not expected to be paid, or not paid in a period when they were expected to be paid.

The Board also tentatively decided to amend the other comprehensive income option and the risk mitigation option in IFRS 17 to:

1. specify that paragraphs 88 and 89 of IFRS 17 do not apply to the insurance finance income or expenses that arise from the application of the risk mitigation option; and
2. add new requirements to the risk mitigation option that specify how to present insurance finance income or expenses that arise from the application of the risk mitigation option.

The Board expects to issue Amendments to IFRS 17 around the end of June 2020.

Review the IASB Update and podcast on the Board's Web site.

At its meeting on May 20, 2020, the IASB discussed the disclosure objectives and supporting guidance to be included in the revised IFRS Practice Statement 1. The Board tentatively decided to specify in the disclosure objectives that management commentary should provide information and analysis to help investors and creditors understand:

(a) the risks that could disrupt the entity’s:

1. business model;
2. management’s strategy for sustaining and developing that model; or
3. resources and relationships; and

(b) how the environment in which an entity operates affects its:

1. business model;
2. management’s strategy for sustaining and developing that model;
3. resources and relationships; or
4. risks.

The Board tentatively decided to specify in the disclosure objectives that the information and analysis included in management commentary should focus on (a) the key risks (i.e., risks that could disrupt the entity’s ability to create value and generate cash flows); and (b) the key factors and trends in the external environment (i.e., factors and trends that affect the entity’s ability to create value and generate cash flows).

The Board’s next discussions are expected to cover what information management commentary should provide on an entity’s performance, position and progress, aggregation of information in management commentary and the status of the Practice Statement.

Review the IASB Update and podcast on the Board's Web site.

At its meeting on May 21, 2020, the IASB discussed requirements for the transition to and early application of the proposed amendment to IFRS 16. The Board also discussed due process, including permission to begin the balloting process. With respect to transition, the Board tentatively decided to require a seller-lessee to apply the proposed amendment to IFRS 16 retrospectively in accordance with IAS 8, except when such application to lease modifications and changes in the lease term is possible only with the use of hindsight.

With respect to early application, the Board tentatively decided to permit a seller-lessee to apply the proposed amendment earlier than the effective date. With respect to due process, the Board tentatively decided to allow a comment period of no less than 120 days for the exposure draft of its proposed amendment to IFRS 16. All of the Board members confirmed they were satisfied the Board has complied with the applicable due process steps and that it should begin the balloting process for the Exposure Draft. The Board plans to publish the Exposure Draft in the third quarter of 2020.

Review the IASB Update and podcast on the Board's Web site.

At its meeting on May 21, 2020, the IASB discussed the feedback on its Exposure Draft relating to (i) characteristics of primary users; (ii) examples of circumstances in which an entity is likely to consider information about an accounting policy material; and (iii) examples for IFRS Practice Statement 2, Making Materiality Judgements. The Board will continue to redeliberate the proposals set out in its Exposure Draft at a future meeting.

Review the IASB Update and podcast on the Board's Web site.