Agenda consultation (All sessions)

Date recorded:

The Board deliberated the following aspects of its agenda consultation project (click to jump to notes):

Tuesday, 17 May Wednesday, 18 May Thursday, 19 May

Dynamic risk management

Post-employment benefits

Primary financial statements

Foreign currency translation

High inflation

Disclosure Initiative – Cash restrictions

Interval between agenda consultations

Potential new topics

Extractive activities, intangible assets and research and development

Equity method

Goodwill and impairment
(see notes from separate discussion)

Definition of a business

Developing the draft working plan


Accounting for Dynamic Risk Management — Agenda paper 4


The purpose of this paper was to provide input to be Board on the feedback in the agenda consultation that was relevant to this project: Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging. This Board was not asked to make decisions at this meeting.

The Board began its deliberations on the project in September 2010, as part of the development of new requirements for financial instruments (IFRS 9). The objective of the project was to deal with the difficulties associated with applying the existing hedge accounting requirements to a dynamically managed portfolio and the fact that the existing portfolio hedge accounting requirements in IAS 39 were limited to only interest rate risk. In May 2012 the Board tentatively decided to develop a Discussion Paper as the initial due process step. The Board separated the projects from the broader FI discussions, allowing it to finalise IFRS 9 while progressing with the accounting for dynamic risk management as a separate project.

As part of the IFRS 9 discussion, the Board decided to provide entities with an accounting policy choice until the project on accounting for dynamic risk management was completed—applying the hedge accounting requirements in IFRS 9 (but being able to apply IAS 39 for ‘fair value hedge accounting for a portfolio hedge of interest rate risk’); or continuing to apply the existing hedge accounting requirements in IAS 39 for all hedge accounting, including ‘fair value hedge accounting for a portfolio hedge of interest rate risk’.

Feedback received via the agenda consultation

  • Respondents from the online survey indicated that the project was important; however, it was not clear to them that a comprehensive accounting solution could be developed to reflect the economics of dynamic risk management activities.
  • Scope of the project: The comments received by some respondents were:
    • The objective of the project should be focused on developing a macro hedge accounting model;
    • The Board should focus on simplifying the requirements in IAS 39;
    • The objectives of the project should be clearly defined;
    • The project should include risks managed by other industries other than banks (i.e. energy and utilities.
  • Respondents provided the following reasons to support the importance of the project:
    • Relevance of interest rate risk management to the banking industry;
    • The project should be considered part of the active agenda due to lack of guidance in IFRS Standards;
    • The interaction with IFRS 9;
    • Existing carve-out requirements in IAS 39 in the EU and the accounting policy choice between IAS 39 and IFRS 9
  • A third of respondents indicated that the project is of no importance. The following reasons were provided:
    • The project should be deferred until IFRS 9 is implemented to help understand how this project should progress;
    • The issue is not widespread in terms of entities affected;
    • Current Standards already enable the reflection of risk management strategies;
    • The project is not urgent for non-financial entities;

The Board tentatively decided in prior meetings that the work on this project should consider the information needs concerning an entity’s dynamic risk management activities as a basis for determining how to approach recognition, measurement and disclosure. The staff indicated that this route has proved to be challenging. Accordingly, the staff was now focusing on recognition and measurement.


No decisions were made at this session.


There was general agreement on the importance of the project. The following comments were made by Board members during the discussion:

  • The project is particularly important for European Banks given the current economic environment with negative interest rates. In that regard, one Board member asked if it would be possible to obtain a simulation on negative interest rates showing what would happen with various components of a portfolio.  He indicated that investors would like to know the effect on net positions of financial institutions.
  • The feedback demonstrated that this project has the potential to have a high impact on European banks.  However, it is not clear whether the Board will be able to find a solution;  disclosures alone will not solve the problem;
  • The project is also considered important in Brazil.
  • The Board does not have enough information to make a decision about how to move the project;
  • It would be very difficult to undertake a comprehensive project; and
  • Some Board members asked the staff to provide an educational session (preferably by experts) to better understand the issue and how entities manage risk. The staff responded that they would arrange that if the Board were to be asked to make decisions at future meetings.


2015 Agenda Consultation- Comments received on research project on post-employment benefits- Agenda paper 15


The 2015 Agenda Consultation did not include specific questions about the research project on post-employment benefits. However, respondents provided their views in terms of the importance and urgency of the project. The purpose of this session was to discuss the staff analysis on the responses obtained. The Board would discuss the staff recommendations regarding the future direction of the project.

Staff analysis

The majority of respondents considered the project of a high/medium importance and urgency. The most significant issues raised by respondents were a) accounting issues for hybrid plans and b) the methodology for selecting a discount rate.

In relation to the first issue, the concerns were related to complexities in the application of the discount rate. For example, one respondent indicated that there were significant application issues that arise from having to discount the expected benefits using high quality corporate bond/government bond rates. The respondent also stated that actuaries have been qualifying their IAS 19 valuation reports on the basis that they believe that the resultant values were misleading.  The staff noted that the inconsistency is due to the following situation: for some hybrid plans, the benefits paid to employees depend, wholly or partly, on the return on a specified pool of assets. Applying IAS 19, an entity projects the benefit on the basis of an assumption of future performance of the specified assets. That return was often assumed to be higher than bond rates. However, the discount rate to calculate the present value of obligations was generally a high quality corporate bond rate as required in IAS 19. The staff explored the issue in more detailed in Appendix C of this agenda paper.

In relation to the second issue, the concerns related to situations in which two companies with identical commitments may have to use significantly different discount rates only because a deep market in corporate bonds existed in one country but did not exist in another country. Another concern noted was that entities were required to consider expected future salary increases for which there were no contractually binding commitments; this requirement might conflict with the definition of a liability.

The latest update on this project was provided by the staff in November 2015. In that session, the staff presented an update which included a) information about global trends in pensions; and (ii) and indication of potential models that might address the issue of hybrid plans. See summary of agenda paper 15 from November 2015 for further detail.

Staff recommendation

The staff did not recommend conducting a comprehensive review of IAS 19. This was based on the feedback obtained. The staff agreed with the concerns raised by respondents in relation to hybrid plans. The staff recommended seeking a solution to the issues related to hybrid plans. The staff presented in Appendix C one approach, a “capped” ultimate cost adjustment model. That approach applied to benefits that vary with the level of returns on specific assets. For those benefits, a cap would be applied on the cash flow included in the measurement of the liability.


No decisions were made at this session. The Board will assess this project in its general discussion on the research agenda on Thursday.


There was general agreement with the staff analysis. During the discussion, the following comments were noted:

  • There were existing problems with IAS 19 and was an obstacle for IFRS adoption—companies are tailoring the pension agreements and are having discussions with regulators;
  • One Board member suggested that instead of considering hybrid plans as a mix of defined benefit and defined contribution plans they should analysed as a third, distinct, category of plans;
  • One Board member asked for moving to a fair value model. The staff responded that there was a discussion in 2008 which did not have significant support;  and
  • The Chairman pointed out that the objective was to identify a simple solution to the issue; he said that many pension schemes were under pressure for economic reasons and many entities were moving towards hybrid plans because they were unable to afford the liabilities.

Only one Board member expressed disagreement with the staff recommendation about the direction of the project. The Board member noted that the issues raised at the IFRS Interpretations Committee were indicative that hybrid plans were not a critical issue

The staff indicated that they would do more work to determine the feasibility of the proposal.


Primary Financial Statements- Proposed approach to research the project- Agenda paper 21


The Primary Financial Statements project was added to the Board’s research agenda in July 2014. The 2015 Agenda Consultation explained the direction of the project. The project examined the purpose, structure and content of the primary financial statements. The purpose of this session was to analyse the feedback obtained from the Agenda Consultation and discussed the staff recommendations. The staff considered that it was important to gather more evidence to understand the concerns raised before defining a detailed scope for the project. The Board was asked to decide on the general direction of the project based on the recommendations prepared by the staff.

Staff Analysis and recommendation

The staff indicated that many respondents to the agenda consultation considered that the project should be of a high-priority. However, there were mixed views about the specific direction that the project should take.

The following is a summary of the main comments received:

  1. The structure and content of the statement(s) of financial performance (i.e. the statement of profit or loss and other comprehensive income). There were also concerns about the extensive use of alternative performance measures. The staff proposed to perform further research focusing on improving the structure and content of the statement of financial performance. The staff also noted that the Principles of Disclosures Discussion Paper would discuss the use of alternative performance measures. The staff would consider the feedback from that project for their research in this area.
  2. Defining a single measure of financial performance, or undertaking further work on the distinction between profit or loss and other comprehensive income (OCI) (including the use of recycling). The staff did not recommend focusing on a single metric or distinguishing between profit or loss and OCI because earlier proposals, including the work on the Conceptual Framework, had not be particularly successful.  The staff also considered that the Board had previously indicated that (i) financial performance was a multi-faceted notion and (ii) it was not feasible to have one single distinction between different types of income and expenses.
  3. The Primary Financial Statements project should consider other issues, for example, the structure and content of the statement of cash flows and implications of digital reporting for the primary financial statements. The staff considered that their research should focus on identifying problems with the current structure of the statements of financial position and cash flows. The staff also agreed with performing research on the implication of digital reporting in this project.

The staff noted that it was clear that of all the primary statements, the greatest concerns relate to financial performance.  The staff acknowledged this, but intended to look at all of the statements, including the relationships and interactions between them.  However, they also believed that additional research was required before the scope of the project could be set out in detail. 


No decisions were made at this session. The Board will assess this project in its general discussion on the research agenda on Thursday.


There was general agreement with the staff analysis about the direction of the project.  The following comments were raised:

  • There was agreement with the staff analysis that the Board should not provide a single definition of performance;
  • It was agreed that the most efficient approach would be to define new subtotals; ordering; aggregation etc.;
  • Some Board members were concerned about discussing P&L presentation without discussing OCI presentation.  They noted that moving in that direction would be inconsistent with the feedback received;
  • The Chairman pointed out that the scope should not be about defining OCI; rather it should be on what items should be presented in OCI. He also emphasised the need to move forward with this project given his concerns about the abuses in the use of non-GAAP measures;
  • It was suggested that the Board would need to consider the merits of providing entities with the opportunity to present information through their own eyes; and
  • Another suggestion was to analyse performance under different business models; one Board member indicated that the staff should analyse the extensive research done in South Africa on this area.


Foreign Currency Translation- Comment letter analysis — feedback received from the Agenda Consultation process - Agenda paper 24E


The agenda paper summarised the feedback received from the 2015 Agenda Consultation on the research project on foreign currency translation. The staff did not present any recommendation to the Board. The Board was not asked to make technical decisions.

The issues being considered in the research project were: (i) whether the accounting requirements for long-term payables and receivables denominated in a foreign currency were appropriate when the currency was volatile and thinly traded; and (ii) whether a more comprehensive review of IAS 21 was needed to address some other matters raised with the Interpretations Committee and identified through the work of the Korea Accounting Standards Board (KASB).

The Board concluded in October 2014 the following: (i) not to develop a narrow-scope amendment to IAS 21 that would apply when the currency is volatile and thinly traded; (ii) not to pursue any of the other matters further; and (iii) to reclassify the research project as longer-term. The Board informed through the 2015 Agenda Consultation that its intention was to remove this project from the research programme, unless it received strong new evidence from the Agenda Consultation that it should reassess its decision.


Feedback received from the 2015 Agenda Consultation

The staff indicated that the majority of respondents supported the Board decision for removing this project from the research programme. The reasons provided by respondents are: (i) this issue was of limited interest and applicability; (ii) the IFRS Interpretations Committee dealt with foreign currency issues on an ongoing basis; (iii) there were narrow-scope issues that could be addressed by narrow-scope amendments. On the other hand, those respondents that opposed the Board’s view expressed the following concerns: (i) it would be important to maintain those projects so that the Board can assess its relevance on an ongoing basis; (ii) the current guidance was neither consistent nor in line with risk management policies; (iii) there were specific problems existing in Latin America (such us lack of free markets, hyperinflation etc.) that require consideration; (iv) there were needs for additional guidance in the determination of the functional currency; and (v) there were problems with the interaction between IAS 21 and IAS 29 for hyperinflationary economies.

The staff noted that the IFRS Interpretations Committee issued an agenda decision in November 2014 related to a request of guidance for translation and consolidation of foreign operations in Venezuela. The staff acknowledged that the agenda decision did not resolve the concern raised. However, in the staff’s view, there was not widespread demand for the Board to reconsider IAS 21. Consequently, the staff recommended no action on that topic.


The Board will assess this project in its general discussion on the research agenda on Thursday.  However, it is likely that the Board will formally remove the project from the research programme.


No significant comments were raised, although one Board member indicated that there should be a fundamental analysis of what he perceived to be flaws in IAS 21, particularly in relation to the functional currency. He indicated that many entities determine the functional currency at the parent level whereas at the subsidiary level they have to pay taxes, dividends etc. in local currency. He said that those issues are not being dealt with in IAS 21.

The staff reminded the Board that the research analysis would be retained even if the project was removed from the active agenda. That information would be available if the project became active in the future.


High Inflation- Comment letter analysis—feedback received from the Agenda Consultation process- Agenda paper 24F


The purpose of this session was to discuss the feedback received form the agenda consultation on the high inflation research project. The staff also obtained feedback from (i) a short online survey with investors; and (ii) the meeting in April 2016 of the Accounting Standards Advisory Forum (ASAF). The Board was not asked to make technical decisions. The agenda paper did not include staff recommendations.

The research project derived from a request received by the Group of Latin American Accounting Standard Setters (GLASS) to: (a) eliminate or reduce the cumulative inflation rate threshold currently included in IAS 29 to identify when hyperinflation exists; and (b) modify the procedures for reporting the adjustments resulting from restating the financial statements.

The Board tentatively decided in April 2015 that it would not propose lowering the inflation threshold in IAS 29 and nor would it do any work on developing an alternative to IAS 29 or a Standard that addresses inflation more generally. The project was therefore designated as having a low priority but remained on the research programme to enable interested parties to comment on these decisions as part of the 2015 Agenda Consultation.

Feedback received

The staff indicated that the majority of respondents from the agenda consultation and investors survey supported the Board decision. The reasons provided were that the issue was of limited interest and applicability. Also, it was mentioned that it affected only a few jurisdictions at the moment. On the other hand, the respondents that did not support the Board decision indicated that (i) high inflation was a phenomenon that affected many countries in Latin America and other parts of the world; (ii) high inflation caused significant distortions in financial statements well before hyperinflation was reached; (iii) if inflation became high in more economies in the future, issues caused by inflation would become more widespread; and (iv) in some circumstances, the interaction between IAS 29 and IAS 21 could lead to distortion of information presented in the financial statements and those distortions could not be corrected solely by disclosure.

During the ASAF meeting in April 2016, the Group of Latin American Accounting Standard-Setters (GLASS) made a presentation on ‘Accounting for the Effects of Inflation’. ASAF members commented include the following: (i) members understood the call to reduce the threshold in IAS 29 but acknowledged that currently the issue affected limited jurisdictions. However it was acknowledged that the issue also arised on consolidation in other jurisdictions for entities that had some operations in jurisdictions with high inflation; (ii) the Board was encouraged to use indicators to determine whether hyperinflation (or high inflation) existed and so allow management to exercise judgement in deciding when to apply IAS 29; and (iii) IAS 29 was developed some time ago. If it were to be applied more widely, application issues may arise and require the support of the IFRS Interpretations Committee.

The staff analysed inflation data since 1987 to identify countries to which the concept of hyperinflation would apply if the three year period threshold were: (i) 100%; and (ii) 26%. The staff noted that in the first case the threshold will be applicable to 37 jurisdictions; while in the second case it will be applicable to 74 jurisdictions. 

Appendix A listed the 36 jurisdictions within the data range for which cumulative inflation did not exceed 26 per cent in any three-year period.

Appendix B (Agenda Paper 24G) showed the jurisdictions within the data range for which cumulative inflation exceeded 26 per cent in any three-year period.


The Board will assess this project in its general discussion on the research agenda on Thursday.  However, it is likely that the Board will formally remove the project from the research programme.


There was general agreement with the staff analysis. However, some Board members thought that the threshold for applying IAS 29 should be lowered.  One Board member focused on issues in Latin America and said that it would be important for countries that were experiencing high inflation.

There was some discussion as to whether the indicator in IAS 29 was definite (i.e. 100% inflation accumulated in three years) or just one of many indicators to consider in determining the scope of IAS 29. It was pointed out that current practice considered the indicator definitive; and that the criteria was useful to have consistency across entities and jurisdictions. The Chairman indicated that if the threshold were lowered; then there would be a lot of questions raised on the application of the Standard. He also indicated that it would be contradictory to use a threshold for high inflation for a Standard that was called hyperinflation.


Disclosure Initiative - Disclosures about restrictions on cash and about liquidity - Agenda paper 11


In December 2014 the Board published an Exposure Draft Disclosure Initiative— Amendments to IAS 7 (‘the Exposure Draft’) which included proposals for the disclosure of restrictions that affect the decisions of an entity to use cash and cash equivalents. As a result of the comments received, the Board decided to further test the issue and consider the feedback obtained from the 2015 Agenda Consultation.

Agenda paper 11B from the April 2016 meeting summarised the feedback obtained from the Agenda Consultation, IAS 7 Exposure Draft and investors. A summary of the feedback is provided below. 

The staff indicates that the FASB issued an Exposure Draft about restricted cash in the context of the Cash Flow Statement. However, the scope was more restricted than the one considered by the staff.

The purpose of this session was to discuss the staff recommendations about how to move forward with this project.


Summary of feedback obtained (Extract from the summary of agenda paper 16B -April 2016)

The staff noted that some investor groups asked for more disclosures about liquidity.  They particularly asked: (i) how much cash and cash equivalent balances were freely available to be used by the parent company at the reporting date and about the existence of potential restrictions on the transfer of cash and cash equivalent balances; (ii) additional disclosures on financial debt; and (iii) a more detailed maturity analysis.

Staff Analysis

The staff analysed two options for the Board to consider about moving forward with this project: a) Cash restrictions only and b) A research project on liquidity disclosures.

  1. Cash restrictions — The cash restriction proposals were included in the IAS 7 Exposure Draft as a complement to the disclosure of a reconciliation of financing liabilities. Investors were in favour of the cash restrictions proposals because the proposals would have provided them with information about the nature and extent of such economic disincentives to the use of cash balances and that information could be used to calculate a more representative net debt figure. The staff considers that the Board should continue to develop the cash restriction proposals. The staff believes that the proposal should require entities to provide: (i) a narrative description of the effect of regulatory, tax, legal, repatriation, and other conditions that could limit the transferability of cash and cash equivalents among the group entities; and (ii) disclosures of the cash and cash equivalent balances that are subject to such limitations. The staff also suggests that it should be considered expanding such disclosures to other liquid assets. The staff believes that this proposal will allow the Board to deliver timely improvements to the information about cash balances. The staff also recommends to develop this project as part of the Disclosure Initiative.
  2. A research project on liquidity disclosures — The staff considered that a more comprehensive project could possibly address the investor’s concerns more appropriately. However, the staff believes that such a project will overlap with other projects such as (i) statement of cash flows and (ii) Financial Instruments with Characteristics of Equity. Nevertheless, the staff indicates that pursuing quick wins in this research project should not preclude going forward with a more comprehensive research project.

Staff recommendations

The staff presented the following options to the Board:

  • Option 1 — finalise the cash restriction proposals on their own in a narrow-scope project as part of the Disclosure Initiative and do not undertake more detailed research on liquidity disclosures;
  • Option 2 — finalise the cash restriction proposals on their own in a narrow-scope project as part of the Disclosure Initiative and then at a later date undertake more detailed research on liquidity disclosures;
  • Option 3 — do not finalise the cash restriction proposals on their own but include the proposals in a more detailed research project on liquidity disclosures; or
  • Option 4 — do nothing (i.e. do not finalise the cash restrictions proposals and do not undertake research on liquidity disclosures).

The staff recommended Option 2 for the reasons stated in the analysis above.


The Board approved the staff recommendations with a small majority of votes (8 to 6 in favour). It should be noted that part 2 of the staff proposal (undertake more detailed research on liquidity disclosures) will be dependent on the broader discussion to be held tomorrow on the research agenda –agenda paper 24A.


There was general agreement on the need to move forward with a project to address the concerns raised by investors. However, there were mixed views as to the best way to do it.

Some Board members had the view that the issues could only be solved by doing a comprehensive project on liquidity. For example, it would be necessary to consider issues related to centralisation or decentralisation of cash management; and implications for banks with many subsidiaries.  There were also concerns about the feasibility of the project. For example whether it would be possible to define disincentives, and how the Standard would be interpreted and enforced. On the other hand, some Board members supported the staff approach because the Board could respond in the short-time to investor’s needs.

The staff noted that the research already done would be sufficient for a narrow-scope amendment. However, it would be necessary to conduct some field testing to test the wording of the amendments.  The staff was asked to test the definition of disincentives because it has caused a lot of concerns during the discussion of the ED.   The staff was also asked to expand the requirements to liquidity and not focus only on cash restrictions.

In relation to a similar project from the FASB, the staff noted that the FASB required entities to disclose in a table the availability of liquid funds.  Also, the FASB used the word limitation instead of disincentive or restrictions. There were also requirements for narrative disclosures.

In relation to a potential overlap with the liability and equity project, the staff noted that some investors asked for more information about covenants and funding which meant that there could be some overlap. However, it did not mean that both research projects needed to be done together.


2015 Agenda Consultation- Interval between agenda consultations- Agenda paper 24B


The 2015 Agenda Consultation proposed to extend the interval between consultation periods from three to five years. This agenda paper provided the staff analysis on the responses received. The Board was asked to decide on the staff recommendations.

Staff analysis

The staff presented their analysis on each of the following topics:

a)      Objective of the agenda consultation: There were few responses obtained in this area and no issues were raised. The respondents indicated that the agenda consultation was important because it provides the opportunity to comment on priorities and the work plan;

b)      Interval between agenda consultations: There were mixed views. Those respondents that focused on the issue of prioritization and long term strategy supported the extension of the consultation period. On the contrary, those respondents that focused on the timely response to new issues preferred a shorter interval. See detailed analysis below:

  1. Time to complete a major project: The staff indicated that many respondents agreed with the proposal to extend the interval to five years. The reasons to support this approach is that it usually takes longer than five years to complete a major research project and the subsequent major standards-level project. Also, respondents indicated that the extension would encourage long-term thinking by the Board and stakeholders;
  2. The need for timely input: In this particular aspect, many respondents indicated that a shorter interval would be necessary in order for the Board to adequately respond to emerging issues;
  3. Interim changes to the work plan: The feedback obtained indicates that the Board should take additional steps to ensure that its work plan remains relevant.  Respondents noted that there were other channels by which the Board could identify new issues (i.e. post implementation reviews and issues raised to the IFRS Interpretations Committee);
  4. Internal reviews of the work plan: There were mixed views. A number of respondents said that the Board should conduct its own review of its work plan on a regular basis. They said that reviews could be conducted annually, regardless of whether the consultation interval is extended. On the other hand, other respondents indicated that the Board should consult more publicly on an interim basis;
  5. Elapsed time between consultations: Many respondents noted that the period between agenda consultations is not currently three years. Respondents noted that the time between the 2011 and 2015 agenda consultations had been four years. Many respondents expressed concern, however, that if the interval was extended to five years, the elapsed time between consultations would be significantly greater than five years;
  6. Burden placed on the Board and stakeholders: The staff indicated that a number of respondents said that the process was burdensome for both stakeholders and the Board. The process also took considerable resources and high degree of stakeholder engagement;
  7. Linkage with the Trustees’ strategic review: The staff indicated that there were mixed views on this matter. Some respondents said that the Trustee’s review should precede the agenda consultation. This was because the Board would be able to reflect the Trustee’s strategy in its proposed work plan. On the other hand, others believed that the two consultation would likely focus on similar issues and should be conducted concurrently;
  8. Linkage with the Chairman’s term: Some respondents indicated that the alignment would be useful. They believed that it would be more reasonable that a new Chairman seeks approval for a new work plan.

Staff recommendations

The staff recommended extending the internal between agenda consultations to five years. The reasons provided were consistent with the feedback obtained detailed above. If this proposal was approved, the staff would recommend at the May 2016 Trustee’s meeting that the Due Process Handbook be revised to state this decision. 


All Board members approved the staff recommendation.


No significant comments or concerns were raised during the discussion. There was general support for the staff recommendation.


Agenda Consultation 2015- New Project Suggestions- Agenda paper 24C


The feedback received on the Agenda Consultation included suggestions for additional projects to be added to the Board’s agenda. The Board discussed these suggestions at the April 2016 Board meeting. (See Staff Paper 24F for the April 2016 Board meeting)

The Board asked the staff for 10 of these possible new projects to be brought back for further consideration. This paper provided (i) a description of those 10 issues; and (ii) staff comments for next steps. The Board was not asked to make any technical decision.

Staff analysis

The staff identified the following projects:

  • IFRS reporting by subsidiaries — The staff indicated that some respondents suggested that the Board should introduce an approach that is based on ‘full IFRS’ recognition and measurement principles, but with reduced disclosure requirements. The staff noted that even though these subsidiaries will meet the definition of SMEs, it is not feasible for them to adopt such Standards. This was because the subsidiaries need to report to the parent entity for consolidation purposes using full IFRSs. The staff considers that the Board could discuss an approach to combine (i) the recognition and measurement of full IFRS Standards and (ii) disclosure requirements of SMEs. However, the staff noted that the disclosures requirement would require some changes to be adjusted to the recognition and measurement requirements. As a way to move forward, the staff suggested conducting some research to assess the feasibility of this idea.
  • Variable and contingent consideration for asset purchases — The staff noted that that the issue referred to accounting for variable and contingent payments for asset purchases outside of a business combination. The Interpretations Committee had been unable to reach conclusions on all of the issues because the existing requirements in IFRS Standards were insufficient in this respect. The staff believed that the discussions at the Interpretations Committee, and the results of outreach that it had undertaken as well as the feedback in the agenda consultation, demonstrated that this was an important issue that was widespread. The staff considered that the Board should consider taking on a project to address this area of financial reporting.
  • Risk sharing / collaborative arrangements — The staff noted that for the purposes of this paper, the topic had been narrowed to arrangements that focused on activities, in order to distinguish it from the previous topic which was about the purchase of assets. The staff indicated that one of the comment letters received identified that a reason why these arrangements were difficult to account for was because the arrangements were based on risk sharing, whereas the Board’s recent standards tended to focus on the notion of control, including the concept of sharing control. The staff believed that the need for a project on risk sharing / collaborative arrangements could be reconsidered after completion of a variable and contingent consideration project.
  • Assessment of the need to withdraw IAS 26 Accounting and Reporting by Retirement Benefit Plans — The staff indicated that IAS 26 was issued in 1987, and had not been revised since. Concerns about its relevance have been raised for some time. The staff recommended the Board issuing a proposal to withdraw IAS 26.
  • Digital currencies, including cryptocurrencies — The staff indicated that a digital currency can be thought of as an online currency that can be used to settle transactions. The use of digital currencies was an emerging business practice. The staff recommended reaching out to accounting standards setters that raised this issue and then determine whether a research project is needed.
  • General principles for separate financial statements — The staff indicated that IFRS Standards made little reference to separate financial statements. In 2014 a group of European standard-setters published a discussion paper on the subject of separate financial statements. That work identified three main financial reporting areas for further consideration; measurement of investments, common control transactions including accounting for business combinations under common control in separate financial statements and disclosures in separate financial statements. The staff considered that the Board could undertake a preliminary assessment of this subject, including consideration of the needs of users of separate financial statements.
  • General principles for combined financial statements — The staff noted that there was a variety of reasons by which combined financial statements were needed. The staff believed that the description proposed in the ED of the Conceptual Framework would make it clear that combined financial statements can be prepared in accordance with IFRS Standards. The Conceptual Framework ED described combined financial statements as ‘financial statements that were prepared for two or more entities that did not have a parent-subsidiary relationship with each other’. The staff noted that the issue was only raised in two comment letters. Nevertheless, if the Board decided to explore the issue further, the staff recommended first conducting some research on: (i) why combined financial statements were needed; and (ii) practical and conceptual issues that arise in the preparation and use of the combined financial statements.
  • Non-reciprocal transactions, including with governments — The staff indicated that some respondents noted that the non-reciprocal aspect of some transactions distinguishes them from other types of transaction, and might reflect an absence of a commercial rationale for the transaction on the part of the ‘contributing’ party, and instead reflect some other motivation, such as social or political. The staff believed that a right or obligation was different because the source of that right or obligation (i.e. statutory vs contractual) was different.
  • Review of IAS 20 Accounting for government Grants and Disclosure of Government Assistance — The staff indicated that there had been historically concerns raised about the consistency of IAS 20 with the Conceptual Framework. However, the staff did not support the idea of conducting a broad review of IAS 20, because it had not identified much support for this idea.
  • Relevance of referring to pronouncements of other standard-setting bodies in the hierarchy in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors — The staff did not recommend any work in this area. The staff believed that the hierarchy in IAS 8 assists in the development of an accounting policy when IFRS Standards did not provide guidance that specifically applies to a transaction, other event or condition.


No decisions were made. The Board will discuss tomorrow the broader research agenda in agenda paper 24A.


The staff focused the discussion on the first three projects because those were the areas in which the staff was recommending further analysis.

In general, there were no significant comments or concerns raised.

In relation to the first project, observations were made about the need to have clear objectives about the project. It would be important to determine whether the project intended to capture entities that could qualify as SMEs or to permit listed companies having fewer disclosures requirements. One concern was that the second option could jeopardise the adoption of IFRSs and risk creating a third tier of IFRSs.

There were few comments on the remaining projects: (i) one Board member indicated that entities from emerging economies would expect more research on government grants; (ii) one Board member expressed disagreement with not pursuing more work on the IAS 8 hierarchy.  His concern was that more research was needed to assess the implications of wider adoption of IFRS as compared to when IAS 8 was issued, particularly the consequences of the reduction in other GAAPs.


Agenda Consultation 2015- Extractive Activities / Intangible Assets / Research & Development- Agenda paper 24D


The purpose of this session was to discuss the feedback received on the extractive activities / intangible assets / Research & Development (R&D) research project in the Board’s Request for Views 2015 Agenda Consultation. The Board was not asked to make technical decisions. The staff indicated that the Project was currently an inactive project on the Board’s research agenda.

Feedback received

The staff explained that the majority of respondents assessed the project as of low priority. The staff indicated that a similar conclusion was obtained from the online survey. In relation to Intangible assets and R&D, the respondents that ranked the project as a high priority provided the following reasons: (i) intangible assets were of increasing importance, yet there was limited recognition of these assets on company balance sheets; (ii) there was inconsistency in the accounting treatment of acquired intangible assets and those that are internally generated; and (iii) some disagreed with the requirement to capitalise development costs. In relation to extractive industries, the reasons provided to rank the project as of high priority were: (i) the importance of the industry in some jurisdictions, including a concern that as more less-industrialised countries adopt IFRS Standards, the need for guidance would grow; and (ii) IFRS 6 was a limited-scope temporary IFRS Standard and had permitted a diversity of practice.

Staff analysis

The staff considered that the arguments made did not provide sufficient evidence to consider these matters urgent. The staff believed that the observations made with respect to the exception from the IAS 8 hierarchy contained in IFRS 6, and the temporary nature of IFRS 6, meant that it should be identified as a future project when resources became available, but the staff did not expect these resources to be available until after the time horizon of the 2015 Agenda Consultation.


No decisions were made. The Board will discuss on 19 May 2016 Agenda paper 24A which includes the research agenda work plan for 2017-2021.


Several Board members expressed a preference for separating exploratory activities in the commodities sector from exploratory activities in other sectors such as pharmaceuticals.  They thought it was better to have a narrower project rather than examining broader issues related to R&D. 

Several Board members expressed a view, which was echoed by the Chairman, that the project for extractive industries was critical not only for those countries specifically involved but also because those companies files their financial statements in most major capital markets. There was diversity in practice which needed to be addressed. The diversity is an existing issue, but it might take a long time to address the issues.

There were several suggestions on potential solutions, such as developing disclosure requirements and then moving on to recognition and measurement.


The Equity Method of Accounting - Next Steps for the Equity Method of Accounting project - Agenda paper 26


The purpose of this agenda paper was to provide an analysis of the feedback from the 2015 Agenda Consultation on the research project on the equity method. The staff also presented feedback from other outreach activities. The staff presented its analysis and recommendations to the Board regarding how to move forward on the project.

The research project is of limited scope and intends to address application problems arising from equity-method requirements in IAS 28. The staff discussed with ASAF members about their view on the preliminary proposals developed by the staff. The proposals focus on eliminating the requirements in IAS 28 for an entity to account for (a) the difference between (i) the cost of the investment and (ii) the entity’s share of the net fair values of the investee’s identifiable assets and liabilities as either goodwill or income; b) that gains or losses resulting from ‘upstream’ and ‘downstream’ transactions between an entity (including its consolidated subsidiaries) and its associates or joint ventures should be recognised in the entity’s financial statements only to the extent of unrelated investors’ interests in the associate or the joint venture. The staff indicated that ASAF members rejected this proposal because it moves away from the traditional view that the equity method is a one-line consolidation method.

Feedback from the Agenda Consultation

The staff indicated that the majority of respondents considered the project of high importance and of low/medium urgency. The staff also noted significant variances across regions. The reason provided was that there is an increased use of the equity method derived from (i) IFRS 11; and (ii) the fact that entities are permitted to use the equity method to account for subsidiaries in separate financial statements. In terms of how to proceed with this project, the staff did not identify a common view. Some respondents indicated that there is a need for a fundamental review of IAS 28; while others indicated that the Board should focus on addressing specific application problems. The issues noted by respondents that support a fundamental review are: (i) address the conceptual basis of the equity method; including whether the equity method is a one line consolidation; the meaning of significant influence; and relationship between the equity method and control; (ii) the methodology to calculate the equity method; (iii) how users perceive the information provided by the equity method; and (iv) how other methods could provide more useful information.

Feedback from the investor’s survey

The staff indicated that the majority of investor respondents agreed that the equity method project is important, but not urgent. Most of these respondents said it would be helpful to introduce clearer disclosures in the investors’ financial statements about the investee’s net assets. The staff did not identify from those responses a clear view on how to move forward with the project.

Staff analysis

Based on the feedback received the staff considers the following alternative proposals to move forward:

  • Alternative 1—continue the limited-scope research project
  • Alternative 2—perform limited-scope outreach with investors
  • Alternative 3—conduct a fundamental review of the equity method
  • Alternative 4 – gather information as part of the PIR of IFRS 10, IFRS 11 and IFRS 12

Staff recommendations

The staff recommended the following actions:

a) the Board defers further work on the Equity Method research project until the Post-implementation Reviews (PIR) of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities are undertaken;

b) the PIR of IFRS 10, IFRS 11 and IFRS 12 specifically seek feedback on investors’ information needs regarding investments accounted for using the equity method; and

c) the Board reconsider the scope of the project after considering the feedback on the PIR of IFRS 10, IFRS 11 and IFRS 12.


The Board supported the staff recommendation.


The majority of Board members indicated that they agreed with the staff recommendations. The discussion was mostly focused on the timing and scope of the PIR project. The staff made the following clarifications: (i) following the feedback from ASAF last June (which recommended waiting for the Agenda Consultation), the staff had not done further work on the project; (ii) the PIR would ask questions focusing on getting information about users’ needs on the equity method; (iii) the information would be used to identify problems and probably new information would arise on issues related on the various areas in which the equity method was being used (joint ventures; associates and separate financial statements); (iv) the PIR would not asked direct questions on the mechanics of the equity method; however it would try to determine users’ needs which would be combined with the information that the staff already had identified (including academic analysis); (v) in relation to timing, the staff noted that the PIR was planned to be launched by the end of 2016 and it would take them a few months to prepare a recommendation; and (vi) at this point the staff was not able to determine whether the result of the PIR would be a DP or an ED.

The most common concern among Board members was whether the PIR would help to solve the problem with the mechanics in the application of the equity method. The staff responded that it would be difficult to solve any problem via narrow-scope amendments. The staff noted that they needed to obtain more information in order to be able to provide the Board with potential solutions. Other Board members noted that the issues were beyond the mechanics because the issues around mechanics had been around for many years and companies knew how to deal with them.

Some Board members also asked the staff to include questions related to the nature of the equity method (i.e. whether it was a one line consolidation; and/or a measurement methodology). The staff considered that this area could be analysed as a second step once they obtained from information from the PIR. Another request was to launch the IFRS 13 and the IFRS 10/11/12 at the same time. One Board member considered that there were common issues because there were unlisted equity investments that had to be measured at fair value.


Feedback received on the Definition of a Business Project — Agenda Paper 13


The purpose of this session was to discuss the feedback obtained from the 2015 Agenda Consultation in relation to the research project on Definition of a Business. The Board was not asked to make any technical decisions.

The staff noted that at the time of writing this paper, the Exposure Draft was being balloted for publication.

Staff analysis

The staff indicated that the majority of respondents considered the project of a high/medium importance and of a high/medium urgency. The reasons provided were: (i) existence of practical issues in applying the Standard; (ii) significant accounting implications based on whether there is an acquisition of a business or a group of assets; (iii) limited guidance provided in IFRS 3; and (iv) problems with interpretation and comparability derived from the difference in the accounting treatment for an acquisition of a business vs a group of assets.

Respondents also recommended the following: (i) the Board should address identified problems with targeted improvements; (ii) maintain convergence with US GAAP; (iii) seek in the long run to eliminate the differences in the accounting treatment between the acquisition of a business vs the acquisition of a group of assets; and (iv) the Board should provide additional guidance and illustrative examples.


No decisions were made. The Board will discuss on 19 May 2016 Agenda paper 24A which includes the research agenda work plan for 2017-2021.


There were no comments raised during the discussion.


2015 Agenda Consultation- Draft work plan 2017-2021- Agenda paper 24A


The purpose of this session was to discuss how the feedback received from the 2015 agenda consultation impacts the strategy for setting the Board’s work plan. The staff analysis also included feedback received by the Trustees in response to their request for views.

Feedback on these consultations was summarised in agenda paper 24A and agenda paper 24B discussed in March 2016, and agenda paper 24B and 24C discussed in April 2016.  See those summaries for further detail.

In this meeting the Board was asked to comment on the following: (a) whether they agree with the strategy for developing the Board’s work plan; (b) what comments they have on the draft work plan; (c) what information should be presented to the IFRS Advisory Council as part of its discussions of the draft work plan; and (d) whether they would like to seek advice on any specific topics from the Advisory Council at its June 2016 meeting.

The agenda paper included three appendices: Appendix A–Presentation of the draft work plan for discussion; Appendix B–Prioritisation of individual research projects; and Appendix C–Implementation projects at 22 April 2016.

a) Feedback that affected the development of the work plan

The main messages the staff took from the comment letters on the balance of the Board’s activities were: (i) the completion of the projects on leases (now completed) and insurance contracts should be a very high priority; (ii) it is important that IFRS Standards continue to be principle-based; (iii) the disclosure initiative is highly important to most respondents; (iv) the Board should focus on its maintenance and implementation activities; (v) there was general support for an evidence-based approach to research; (vi) the introduction of post-implementation reviews (PIRs) was welcome; and (vii) several respondents noted that the RFV did not mention the IFRS for SMEs Standard.

Investors indicated that: (i) the Board should refocus its standards-level projects away from topics that relate to single types of transactions and, instead, address topics that could make financial reporting more relevant; and (ii) would like the Board to place a high priority on projects that would significantly enhance the information that they receive.

The staff noted that a clear message in outreach and the responses to the RFV was that respondents found the recent level of changes to IFRS Standards a burden.  Several commentators suggested that when deciding on its work plan, the Board should identify one or more ‘themes’ to provide both a framework for that process and context for respondents. In addition, several respondents suggested that the Board’s strategy for deciding its work plan should be aligned with the Trustees’ stated goals as laid out in the Trustees’ RFV. The staff believed that rebalancing the Board’s activities away from major projects to the maintenance of existing IFRS Standards and to implementation support, as suggested by respondents, would reduce the burden of change for all stakeholders.

b) Resourcing and the Board’s capacity to deliver its work plan

The RFV did not contain any information about the level of resources available to the Board and few respondents commented on this matter. In Agenda Paper 24B, the staff recommended that the Board confirm its proposal in the RFV that the interval between agenda consultations be extended from three to five years. The staff had concluded that the current level of resources available to the Board is about right to enable it to carry out the work plan, without overwhelming stakeholders.

c) Draft work plan for discussion

At its March and April meetings, the Board discussed the prioritisation of research projects in general and the messages received about the importance and urgency of individual research projects. Those discussions will continue during the May meetings.

In the light of feedback received and of the Board’s discussions in April and May, the staff believed that the following research projects should be actively pursued from the beginning of the forecast period 2017-2021 for the reasons given:



Business combinations under common control

Highly ranked by comment letter respondents from a wide range of countries, and in emerging market outreach.

Disclosure initiative

This project was the highest ranked topic by comment letter respondents and was the second highest ranked topic in the online survey.

Dynamic risk management

Fundamentally important to those entities affected.

Financial instruments with characteristics of equity

Fundamental topic to those affected.

Goodwill and impairment

A high priority topic to comment letter respondents.

Primary financial statements

The scope and objective of the project is currently being developed. High importance to most comment letter respondents.

The agenda paper also detailed the projects that will be inactive either because they depend on other activities; projects that can become active if resources become available; and inactive projects for which no work is likely to occur during the forecast period 2017-21. In the first category, the projects were: (i) Equity method; and (ii) Provisions, Contingent Liabilities and Contingent Assets (review of IAS 37). In the second category the projects were: (i) Foreign exchange rates; (ii) Pollution pricing mechanisms; (iii) Post-employment benefits; (iv) SMEs that are subsidiaries; and (v) Variable and contingent consideration. The staff indicated that there was no research activity currently planned for the project for extractive industries. The staff also indicated that the following projects should be removed from the research programme: (i) Foreign currency translation; (ii) High inflation; (iii) Income taxes; (iv) Intangible assets and R&D.

Next Steps

The staff proposed taking material based on this Agenda Paper to the June 2016 meeting of the Advisory Council for discussion. The staff would take feedback from the meeting of the Advisory Council to the Board in July 2016 as input to the Board’s final work plan.


The Board did not make decisions about specific projects. It was only decided to move the following projects to the pipeline (inactive projects that could become active if resources became available): (i) extractive industries; (ii) high inflation; and (iii) pension plans- project for hybrid plans (discussed in agenda paper 15). The staff will present this tentative decision to ASAF to obtain their feedback.


The discussion was mostly focused on how the work programme should be presented, such as how to categorise the projects and resources. The comments were mostly on the strategy. The discussion on the projects was very brief and there was no opportunity for the Board members to comment on each project.

Even though most members indicated that the agenda paper was well presented, there were concern about the lack of clarify of the information presented. The concerns were (i) no clear message about the priorities of the projects; (ii) perceived inconsistencies in the information about the number of years for each project (for example the Chairman pointed out that the agenda paper showed that the project on Dynamic risk management would take five years); (iii) the information presented was not helpful to the Board to make decisions; for example it was not clear that all projects would lead to standard setting activities; some of them could be narrow scope amendments.  On that matter the staff noted that it was difficult for them to make such assessment until some research was being done; (iv) there was extensive discussion about how to denominate the projects located on page 31 which the staff considered as “inactive”; the concern  was that it implied that nothing would be done when actually the issue was that there was lack of resources; many Board members considered that it should be called “pipeline”; (v) it was noted that if the Board wanted to move projects from the total inactive phase to the pipeline it would be necessary to remove projects from the active agenda given the lack of resources;  and (vi) the role of national standard setters was discussed; there was general agreement that the cooperation should be done under the Board supervision and only when a project became active (i.e. after the staff conducted research to identify the relevant issues)

In relation to specific projects that were considered inactive; there was a brief round on each of them and the Chairman and some Board members indicated preference for the following projects to be moved to the pipeline (i) extractive industries (tentatively to be considered by stages); (ii) high inflation (tentatively as a narrow scope amendment); and (iii) pension plans (issue discussed in agenda paper 15- also tentatively as a narrow scope amendment)

The staff was also asked to determine for the projects that were active, what actions could be taken regarding the areas in which research had already been done (for example business combinations under common control).

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.