The research report states that it has been widely observed that application of the existing version of IAS 36, Impairment of Assets is problematic in practice, causing significant issues at all stages in the financial reporting cycle. The authors conclude that the ongoing application issues demonstrate consistent divergence in understanding between preparers, users, auditors and regulators as to the procedures that should be applied in ensuring that assets are carried at no more than their recoverable amount. They are convinced that IAS 36 requires holistic reconsideration rather than piecemeal changes focussed on disclosure. The research report therefore recommends:

Review IAS 36 in its entirety with a view to issuing a new standard that provides principles that enable users, preparers, auditors and regulators to develop a common understanding of the practical aspects of undertaking the procedures applied to ensure that assets are carried at no more than their recoverable amount.

Other themes and recommendations coming out of the research include:

• There is an overall lack of clarity on the purpose of the impairment test;
• the application guidance does not align with internal decision-making; and
• diversity in disclosure reduces usefulness.

Review the full research report on the AASB's website.