Primary financial statements

Date recorded:

How to present the Exposure Draft and the number of illustrative examples (Agenda Paper 21)


In July 2019, the Board gave the staff permission to start the balloting process for the publication of the Exposure Draft (ED). In a draft circulated among stakeholders and Board members, the staff have decided to present the ED as a draft new IFRS Standard rather than amendments to IAS 1. This has caused concerns among the recipients of this draft.

In addition, the Board had tentatively decided which illustrative examples should accompany the ED. However, the staff would like to recommend a different approach.

Staff analysis

The concerns with regard to the presentation of the ED were mainly that the staff included paragraphs in the circulated draft that were taken over from IAS 1 unchanged. This could give the impression that those paragraphs were developed by the Board as part of the Primary Financial Statements (PFS) project, using concepts in the revised Conceptual Framework. The staff, however, think that careful communication would resolve this issue.

With regard to the illustrative examples, the staff have found in drafting that they may be excessive. The staff think that a reduced number of examples would still successfully illustrate the Board’s proposals.

Staff recommendations

The staff recommended the Board:

  • a) present the ED as a draft new IFRS Standard rather than as amendments to IAS 1.
  • b) reduce the number of illustrative examples of the statement(s) of financial performance included in the ED to a handful of examples needed to illustrate the Board’s main proposals. This recommendation would change the tentative decision made at the November 2018 Board meeting.

Board discussion

There were mixed views among Board members with regard to drafting a new Standard. One Board member argued that the Board had always wanted targeted improvements and an amendment to IAS 1 would convey this better than a new Standard. When a new Standard is issued, the requirements are articulated in a way that reflects the Board’s current best practice. Had the Standard been drafted completely new considering the Board’s current best practice, the logical flow would be different and the distinction between requirements and application guidance would be clearer. As there is no time to redraft the carried over requirements of IAS 1, it would be better to retain IAS 1 and make targeted amendments to it. One Board member noted that the new Standard should be in line with the revised Conceptual Framework, however, she could only find minor inconsistencies between the requirements proposed to be carried over from IAS 1 and the revised Conceptual Framework.

The Chairman argued that it is already unfortunate to have two sets of Standards (IAS Standards and IFRS Standards), with IAS Standards being perceived as old and not as good as IFRS Standards. Every IAS Standard that could be replaced with an IFRS Standard would be beneficial for the IFRS Foundation. Other Board members agreed that a fundamental change like the one proposed by the project would merit a new Standard. They noted that it was merely a matter of communication rather than a fundamental issue. It should be well explained in the Basis for Conclusions why the carried over requirements were not redeliberated during the discussions of the project.

With regard to the illustrative examples, some Board members were reluctant to delete any agreed examples as all of them explained certain permutations of the requirements. Others expressed sympathy for reducing the number of examples, but only if it could be ensured that none of the permutations will be lost in the process. The Chairman suggested to give the staff some flexibility with regard to the number of examples.

Board decision

12 of the 14 Board members voted in favour of drafting a new Standard and giving the staff some flexibility with regard to the number of illustrative examples, as long as all permutations are explained in the drafted examples.

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