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IFRIC update

Date recorded:

The Director for Implementation Activities (“ID”) provided highlights of some of the items included in the paper:

  • IAS 19 Employee Benefits: plans with a guaranteed return on contributions or notional contributions. The ID indicated that there are some challenges related to this project and that the Interpretations Committee acknowledged that the scope of this project might be broader than it had envisaged, specifically depending on the definition of the variable components of the plans that fall within the agreed scope. The Interpretations Committee will discuss at a future meeting how to proceed with this project.
  • IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: (tentative agenda decision) – The IFRS Interpretations Committee received a request for clarification of the distinction between a change in accounting policy and a change in an accounting estimate. The Committee acknowledged that there is judgement required.  However, it observed that paragraph 35 of IAS 8 states that when it is difficult to distinguish a change in an accounting policy from a change in an accounting estimate, the change is treated as a change in an accounting estimate. Consequently, the Interpretations Committee expected that an entity would follow this guidance in circumstances in which it is unclear whether a change is a change in accounting policy or a change in accounting estimate occurred, although the Interpretations Committee adds that sufficient analysis should be made before reaching the conclusion. The tentative view is to bring this matter to the attention of the IASB in the disclosure initiative or to be considered in the conceptual framework project.
  • IFRS 10 Consolidated Financial Statements: Investment Entities Amendments—Investment entity subsidiary that provides investment-related services (work in progress).  The Interpretations Committee received a request to clarify the accounting by an investment entity that has an investment entity subsidiary that provides investment-related services. The Investment Entity amendments introduced an exception to the consolidation requirement that an investment entity shall measure its investments in subsidiaries at fair value. There is an exception to the exception: if a subsidiary provides investment-related services, the investment entity shall not measure this subsidiary at fair value and the investment entity shall consolidate the subsidiary instead. According to the submitter, in the case in which an investment entity subsidiary meets the definition of an investment entity (which has investees measured at fair value) and, additionally, provides investment-related services, it is unclear whether the investment entity parent should measure that subsidiary at fair value or consolidate it. The Interpretations Committee noted that it is not clear how to account for a subsidiary that is both an investment entity subsidiary and provides investment-related services. Accordingly, the Interpretations Committee decided to add this issue to its agenda. The staff will present the wording for the proposed amendment at a future meeting. The Interpretations Committee also observed that analysing this issue requires clarity about what services are provided, and to whom, in order for these services to qualify as investment-related services. The staff will consider this as part of their analysis at a future meeting.
  • IFRS 11 Joint Arrangements- The Interpretations Committee received several requests with regard to the application of the requirements of IFRS 11. At the November IFRS Interpretations Committee meeting, the staff presented a summary of the results of the outreach that was conducted on implementation issues arising from IFRS 11. The summary of the result of the outreach included (1) views from respondents on the several issues identified in the outreach request and (2) additional issues raised through the feedback from the outreach request. The Interpretations Committee identified the following priority issues for further consideration: (1) whether an assessment of ‘other facts and circumstances’ should take into account facts and circumstances that do not involve contractual and (legal) enforceable terms and (2) how the parties to a joint operation should recognise assets, liabilities, revenues and expenses, especially if the parties’ interests in the assets and liabilities differ from their ownership interest in the joint operation. The Interpretations Committee asked the staff to identify the issues that would require further guidance and the issues that can be resolved within the context of the current Standards. The staff will present an analysis at a future meeting.

Note: The agenda paper includes other topics which were not addressed by the Implementation Director during this meeting.

Correction list for hyphenation

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