Research Programme – Research Update - Agenda paper 8

Background

The Staff gave the Board a status update on its research programme.

Active research projects

The Board is actively working on the following eight projects:

1. Discount Rates (complete, producing research summary)
2. Share-based Payment (complete, producing research summary)
3. Disclosure Initiative—Principles of Disclosure (deliberating feedback on discussion paper)
4. Financial Instruments with Characteristics of Equity (drafting discussion paper)
5. Primary Financial Statements
6. Business Combinations Under Common Control
7. Dynamic Risk Management
8. Goodwill and Impairment

The last four projects are currently under Board discussion.

Staff recommendation

The Staff recommended that the Board start the following pipeline projects in the next few months:

1. Variable and Contingent Consideration;
2. Provisions;
3. Extractive Activities;
4. Pension Benefits that Depend on Asset Returns; and
5. SMEs that are Subsidiaries.

The Staff also recommended that the Board start the remaining pipeline projects in 2019 or early 2020:

1. Equity Method;
2. Pollutant Pricing Mechanisms;
3. High Inflation: Scope of IAS 29; and
4. Post-implementation Reviews of:
   • (a) IFRS 10-12; and
   • (b) IFRS 5.

Discussion

Eleven Board members agreed with the Staff’s recommendations.

There was strong support from a number of Board members to start the work on extractive industries. The Chair suggested that they seek feedback from stakeholders about the cost-benefits of the project at an early stage because many preparers may be reluctant to change since they enjoy significant flexibility under IFRS 6. Given that this project will lead to standard-setting activities, a couple of members asked the Staff to plan resources accordingly so as not to leave a large time gap between completion of the research and commencement of standard-setting.

There was also a lot of discussion on when to start the equity method project. One Board member strongly opposed postponing the project to 2019; however, most other Board members agreed that the Board should conduct the PIR of IFRS 11 before starting work on the equity method project as they are interlinked. This also led to the suggestion of decoupling the PIR of IFRS 11 from that of IFRS 10 and 12.

As regards the work on SMEs that are subsidiaries, the objective is to assess whether it would be feasible to permit these entities to use the recognition and measurement requirements in full IFRS Standards with the disclosure requirements in the IFRS for SMEs Standard. One Board member noted that the Australian Accounting standards Board has developed its own reduced disclosure regime for SMEs. The Staff could research how regularly these new requirements are used and their popularity with preparers and users before advancing their own work in this regard.