IASB finalized its Post-implementation Review (PIR) of the impairment requirements outlined in IFRS 9 Financial Instruments—Impairment. This review was undertaken to evaluate if the impairment requirements have been effective in achieving the objectives set by the IASB at the time of their development. The comprehensive analysis and feedback gathered during the PIR indicate that these impairment requirements have generally met their intended purposes. They have enabled a more timely recognition of credit losses and have been instrumental in providing insightful information to investors regarding expected credit losses. Despite these successes, there were recommendations for enhancements, particularly concerning the disclosures of credit risk to further refine the utility of the information provided to investors.

Responding to the insights and suggestions from the PIR, the IASB has acknowledged areas that require additional clarity and consistency in application. To address these issues, the IASB intends to review and possibly amend the requirements related to the modification, derecognition, and write-off of financial instruments as part of its ongoing project on Amortised Cost Measurement. Furthermore, recognizing the need for improved disclosures regarding credit risk, the IASB has initiated a new project focused on targeted improvements to the credit risk disclosure requirements detailed in IFRS 7 Financial Instruments: Disclosures. This initiative aims to enhance transparency and provide stakeholders with more detailed and useful information about financial instruments' credit risks.

Access the press release and the final report on the IFRS Foundation website.

The podcast highlights some of the projects that were discussed during the meeting, including:

• Post-implementation review of IFRS 16
• Joint IASB-FASB meeting
• Provisions — Targeted improvements
• Pollutant pricing mechanisms
• Management Commentary

The podcast can be accessed here on the IFRS Foundation website

During his keynote at the IFRS Foundation Conference, Mr.Barckow addressed the escalating complexities in financial reporting. He pinpointed the growing intricacy of business transactions as a central issue stemming from rapid changes and complexities in the business environment. This evolution affects financial reporting, making it challenging for companies to communicate their financial narratives to investors clearly and for investors to utilize this information effectively. Mr. Barckow also highlighted complexities introduced by intricate supply chains and risk factors, which add difficulty in understanding and managing financial data.

In his speech, Mr. Barckow acknowledged criticisms of the IASB as a source of complexity for those applying and using IFRS Accounting Standards. However, he emphasized the Board's commitment to navigating this complexity thoughtfully, balancing the need for detailed information against the quest for simplicity. He outlined the IASB's approach to managing these challenges, including issuing new standards like IFRS 18 and IFRS 19, taking strategic steps such as enhancing collaboration among technical teams, prioritizing projects effectively, and providing tools like the IFRS Accounting Taxonomy to simplify stakeholder access to information. Furthermore, Mr. Barckow discussed the IASB's cooperation with the International Sustainability Standards Board (ISSB) to integrate financial and sustainability reporting, illustrating a proactive approach to meet evolving investor needs while maintaining impartiality and informed decision-making.

Access the speech on the IASB’s website.

Below is an analysis of all changes made to the work plan since our last analysis on May 28, 2024

Standard-setting projects

• Management commentary — the IASB has decided to finalize the management commentary project by issuing targeted improvements to the practice statement (expected in H1 2025).

Maintenance projects

• Amendments to the classification and measurement of financial instruments— final amendments were issued on May 30, 2024, the project has, therefore, been removed from the work plan.
  • Power purchase agreements— the discussion of the feedback received is now expected to begin in August 2024 (previously Q3 2024).
  • Provisions — Targeted improvements— an exposure draft is now expected in Q4 2024 (previously H2 2024).

Research projects

• Post-implementation review of IFRS 16 — a new entry indicates that a request for information is now expected in H1 2025.

Governance

• ISSB consultation on agenda priorities — this project has been removed from the work plan since the ISSB concluded the project on June 24, 2024, by publishing a feedback statement.

Developments expected to occur in July 2024

• Exposure draft on annual improvements to IFRS accounting standards
• Exposure draft on climate-related and other uncertainties in the financial statements
• Decision on the project direction on financial instruments with characteristics of equity
• Feedback statement on the post-implementation review of IFRS 9 — Impairment
• Exposure draft for updating IFRS 19
• Exposure draft on the use of a hyperinflationary presentation currency by a non-hyperinflationary entity (IAS 21)

The above is a faithful comparison of the IASB and ISSB work plan on May 28, 2024 and June 24, 2024.

For access to the current work plan at any time, please click here.

The paper explores valuation inspections and considers the benefits and challenges associated with various types of inspections, including traditional physical inspections and technology-based virtual assessments. It is intended to support the valuation community by offering insights and practical guidance on navigating the complexities of asset inspections, thereby ensuring the reliability and accuracy of valuations.

 The series on perspectives papers is now as follows:

• The Case for Realigning Reporting Standards with Modern Value Creation (September 2021)
• Human Capital Introspective (May 2022)
• Rethinking Brand Value (September 2022)

• Deciphering Technology (July 2023)
• Data and Valuation (March 2024)
• Inspection of Tangible Assets (June 2024)

Access the press release on the IVSC’s website.

These amendments respond to feedback from the 2022 Post-implementation Review of the Accounting Standard and clarify the requirements in areas where stakeholders have raised concerns, or where new issues have emerged since IFRS 9 was issued.

These include:

• Clarifying the classification of financial assets with environmental, social and corporate governance (ESG) and similar features— ESG-linked loan features can influence their measurement at amortized cost or fair value. Stakeholders queried the determination process based on cash flow characteristics. The amendments provide clarity on assessing contractual cash flows to avoid divergence in practices.
• Settlement of liabilities through electronic payment systems— Stakeholders noted difficulties in applying IFRS 9 derecognition rules to settlements via electronic cash transfers. Amendments clarify the derecognition date for financial assets or liabilities. The IASB also plans to create an accounting policy allowing early derecognition of financial liabilities under certain criteria.

With these amendments, the IASB has also introduced additional disclosure requirements to enhance transparency for investors regarding investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features, for example features tied to ESG-linked targets.

The amendments are effective for annual reporting periods beginning on or after January 1, 2026.

Access the press release on the IASB’s website.

The podcast highlights some of the projects that were discussed during the meeting, including:

• Feedback related to exposure draft for financial instruments with characteristics of equity.
• Developments in the post-implementation review of IFRS 9 impairment project

The podcast can be accessed here on the IFRS Foundation website

Below is an analysis of all changes made to the work plan since our last analysis on April 29, 2024

Standard-setting projects

• Business Combinations — Disclosures, Goodwill and Impairment — Exposure draft feedback is now expected in Q4 2024 (previously H2 2024). 
• Subsidiaries without Public Accountability: Disclosures— This project has been removed from the work plan since the IASB issued IFRS 19 on 9 May 2024. 
• Financial Instruments with Characteristics of Equity — The next step in this project is now a decision on the project direction (expected in July 2024).

Maintenance projects

• Amendments to the Classification and Measurement of Financial Instruments—IASB issued amendments on May 30, 2024. 
• Climate-related and Other Uncertainties in the Financial Statements— An exposure draft expected to be published in July 2024 (previously Q3 2024). 
• Power purchase agreements — An exposure draft of proposed amendments was published on May 8, 2024. The project is now in the feedback stage which is expected to start in Q3 2024. 
• Updating the Subsidiaries without Public Accountability: Disclosures Standard — An exposure draft is now expected in July 2024 (previously Q3 2024). 
• Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity (IAS 21)— An exposure draft is now expected in July 2024 (previously Q3 2024)

Research projects

• Intangible Assets— Review of research is now expected in Q4 2024 (previously H2 2024).
• Post-implementation Review of IFRS 9 — Impairment— A feedback statement is now expected in July 2024 (previously Q3 2024)

Research projects

• IFRS Accounting Taxonomy Update — Primary Financial Statements— A proposed taxonomy update was published on May 23, 2024. The project is now in the feedback stage which is expected to start in the H2 2024.

The above is a faithful comparison of the IASB and ISSB work plan on April 29, 2024, and May 28, 2024, respectively.

For access to the current work plans at any time, please click here.

Under SEC rules, registrants must file certain financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Foreign private issuers, however, are permitted to file financial statements prepared by International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) or by their home country GAAP with reconciliation to U.S. GAAP.

In May 2024, the IASB issued IFRS 19, which permits certain subsidiaries of reporting entities to provide reduced disclosures when applying recognition, measurement and presentation requirements in IFRS Accounting Standards. IFRS 19 also specifies that eligible subsidiaries that elect to use the standard must provide additional material disclosures when it determines that information is necessary to enable financial statement users to understand the impact of transactions, events and conditions on the subsidiary’s financial position and financial performance.

Even though the entity may be eligible to apply IFRS 19 in order to benefit from reduced disclosures, it should carefully consider whether it is nevertheless required to include additional material disclosures from other IFRS Accounting Standards to achieve the objectives of financial reporting given the use of those financial statements in a filing with the SEC.

Access the statement on the SEC’s website.

In IFRS-compliant consolidated financial statements, parent companies require subsidiaries to use IFRS Accounting Standards for reporting. However, subsidiaries can opt for IFRS, IFRS for SMEs, or national standards for their records. This often leads to maintaining two accounting record sets due to differing requirements. Subsidiaries using IFRS for their own financial statements may provide disclosures disproportionate to user needs.

IFRS 19 will:

• Enable subsidiaries to keep only one set of accounting records―to meet the needs of both their parent company and the users of their financial statements and
• Reduce disclosure requirements―IFRS 19 permits reduced disclosures that are better suited to the needs of the users of their financial statements.

Subsidiaries can apply for IFRS 19 if they do not have public accountability and their parent company applies IFRS Accounting Standards in their consolidated financial statements. A subsidiary does not have public accountability if it does not have equities or debt listed on a stock exchange and does not hold assets in a fiduciary capacity for a broad group of outsiders.

Access the press release on the IASB’s website.