At its meeting on April 25-27, 2023, the IASB discussed the proposed requirements for determining the risk mitigation intention (RMI), specifically considering how an entity would define managed risk and construct benchmark derivatives. The IASB tentatively decided that (i) the managed risk is the specified interest rate risk an entity manages consistent with its risk management strategy and is therefore the risk an entity’s risk limits are based on; and (ii) the benchmark derivative is calibrated to current market rates of the managed risk to achieve a fair value of zero based on the RMI by repricing period. The IASB also reconsidered and reconfirmed two tentative decisions from previous meetings (i) the RMI is evidenced by the actual amount of interest rate risk by repricing period transferred to a party external to the reporting entity (for example, external to the group or individual entity that is being reported on); and (ii) the repricing periods of the available risk to mitigate are aligned with an entity’s risk management strategy. The IASB considered further a qualifying criterion for determining the current net open risk position (CNOP)—that future transactions can only be designated in the DRM model when they are highly probable. The IASB tentatively decided (i) to require future transactions that are the reinvestment or refinancing of existing financial assets or financial liabilities at the prevailing market interest rate to be included in the CNOP when they are expected to occur; and (ii) all other future transactions must be highly probable to occur in order to qualify for inclusion in the CNOP.

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At its meeting on April 25-27, 2023, the IASB continued its discussions on the remaining topics in the project plan. The IASB discussed whether to amend the scope of IFRS 7 Financial Instruments: Disclosures to reflect the fact that the proposed disclosure requirements would apply to an entity’s issued equity instruments. The IASB tentatively decided (i) to expand the objective of IFRS 7 to enable users of financial statements to understand how an entity is financed and what its current and potential ownership structures are; and (ii) to delete the reference to derivatives that meet the definition of an equity instrument in IAS 32 Financial Instruments: Presentation from paragraph 3(a) of IFRS 7, which excludes such derivatives from the scope of the latter Standard. The IASB then discussed whether its proposed disclosure requirements on terms and conditions needed any further refinement, and whether to require other disclosures on terms and conditions. The IASB also considered whether to develop further disclosure requirements to complement the proposed clarifications to the classification and presentation requirements in IAS 32. The IASB discussed proposed transition requirements for an entity that applies the proposed amendments to IAS 32, IFRS 7 and IAS 1.

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At its meeting on April 25-27, 2023, the IASB redeliberated the proposals in its Exposure Draft Regulatory Assets and Regulatory Liabilities relating to (i) the recognition and measurement of regulatory assets and regulatory liabilities arising from performance incentives that relate to an entity’s performance over several periods (long-term performance incentives); and (ii) the derecognition of regulatory assets and regulatory liabilities. The IASB tentatively decided to retain the proposal to require an entity to estimate the amount of a long-term performance incentive, and to determine the portion of that estimated amount that relates to the reporting period using a reasonable and supportable basis. The IASB tentatively decided that the prospective Standard would (i) require an entity to derecognize (a) a regulatory asset as it recovers part or all of the regulatory asset by adding amounts to future regulated rates charged to customers; and (b) a regulatory liability as it fulfils part or all of the regulatory liability by deducting amounts from future regulated rates charged to customers; (ii) explain that the derecognition of regulatory assets and regulatory liabilities, as described in paragraph (i), is the most common way in which regulatory assets and regulatory liabilities would be derecognized. Therefore, in applying the recognition and measurement requirements at the end of each reporting period, an entity would not be required to consider explicitly when and how its regulatory assets and regulatory liabilities should be derecognized; (iii) clarify that an entity would derecognize a regulatory asset or a regulatory liability if the asset or liability ceased to meet the ‘more likely than not’ recognition threshold; (iv) include guidance on the derecognition of regulatory assets and regulatory liabilities settled by a regulator or another designated body. The guidance would also require an entity to recognize the difference between the derecognized regulatory asset or regulatory liability and any new asset or liability in profit or loss; (v) specify that if a regulatory asset or a regulatory liability is added to or deducted from an entity’s regulatory capital base and the entity’s regulatory capital base has no direct relationship with its property, plant and equipment, the entity would derecognize (a) the regulatory asset and recognize any associated regulatory expense in profit or loss; and (b) the regulatory liability and recognize any associated regulatory income in profit or loss. The IASB also tentatively decided not to include in the prospective Standard any guidance on the securitization of regulatory assets.

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At its meeting on April 25-27, 2023, the IASB continued its discussions on application questions within the scope of the Equity Method research project. The IASB also discussed moving the project to its standard-setting work plan and working towards publishing an exposure draft as the next due process step. The IASB tentatively decided to propose that an investor would account for, and include in the carrying amount of its investment in an associate, a deferred tax asset (or liability) arising from recognizing its share of the associate’s net identifiable assets and liabilities at fair value. The IASB decided (i) to move the Equity Method research project to its standard-setting work plan; (ii) to continue to use the expertise of its advisory bodies instead of establishing a consultative group; and (iii) to update the project’s objective so that it is now: to develop answers to application questions about the equity method, as set out in IAS 28 Investments in Associates and Joint Ventures, using the principles derived from IAS 28 where possible. The IASB also decided to work towards publishing an exposure draft as the next due process step.

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At its meeting on April 25-27, 2023, the IASB considered the direction of its project on Business Combinations under Common Control. The IASB discussed whether the merits of continuing in the current direction are likely to justify the necessary resources or whether to consider changing the direction. The IASB will seek feedback from its consultative groups before continuing its discussions.

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At its meeting on April 25-27, 2023, the IASB discussed the forthcoming Request for Information Post-implementation Review of IFRS 9—Impairment. The IASB approved the publication of the Request for Information for public comment and set a 120-day comment period.

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At its meeting on April 25-27, 2023, the IASB met to discuss its project to make improvements to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The IASB discussed possible amendments to the requirements and guidance supporting one criterion for recognizing a provision—the criterion that an entity has a present obligation as a result of a past event. The IASB was not asked to make any decision. The IASB will consult stakeholders on the possible amendments.

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