Date recorded:

Project proposal (Agenda Paper 22)

The purpose of this session was to decide whether the Board should add to its standard-setting programme a project to amend aspects of IAS 37 and, if so, what the scope of that project should be.

The Board currently has a project on IAS 37 regarding the costs to be included in the onerous contract assessment. However, stakeholders have suggested that other various aspects of IAS 37 are deficient and need to be amended. The staff has gathered evidence to decide, for each of those aspects, whether amending IAS 37 would address the needs of users of financial reports as well as whether the benefits of the improvements to financial reporting would outweigh the costs. The staff concluded that this is the case for some, but not all of those aspects.

Staff recommendation

The staff recommended the Board add to its standard-setting programme a project to amend aspects of IAS 37 and that the scope of the project comprises:

  • aligning the IAS 37 liability definition and requirements for identifying liabilities with the Conceptual Framework. The alignments could include withdrawing IFRIC 21 and replacing it with new requirements and illustrative examples.
  • clarifying which costs to include in the measure of a provision.
  • specifying whether the rate at which an entity discounts a provision for the time value of money should reflect the entity’s own credit risk.

Agenda Paper 22A contains a summary of the staff’s research.

Board Discussion

All Board members were in favour of including a project on the standard-setting programme.

Some Board members suggested that the project should also include clarification of the measurement objective of IAS 37 albeit that this would be a considerable extension of the project.

A number of Board members expressed concern that an extension of the project to include the measurement objective would result in the current issues in scope taking too long to resolve and a more focused project would be a better use of limited resources.

Board Decisions

The Board voted unanimously in favour of adding a project to amend aspects of IAS 37 to its standard-setting programme.

11 Board members voted in favour of the staff proposal on the scope of the project limiting it to the three issues described in the recommendation.

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