Third agenda consultation

Date recorded:

Cover paper (Agenda Paper 24)

The IASB published its Request for Information Third Agenda Consultation (RFI) in March 2021, with a comment letter deadline of 27 September 2021.

At its March 2022 meeting, the IASB discussed new financial reporting issues to be added to the IASB’s work plan for 2022 to 2026 and tentatively decided to shortlist seven projects for further discussion at this meeting (in alphabetical order):

  • Climate-related risks
  • Cryptocurrencies and related transactions
  • Going concern disclosures
  • Intangible assets
  • Operating segments
  • Pollutant pricing mechanisms
  • Statement of cash flows and related matters

The purpose of this meeting was to discuss the shortlisted projects and decide which projects to add to the IASB’s work plan for 2022 to 2026.

Projects to add to the work plan (Agenda Paper 24A)­

This paper set out the staff’s further analysis of those shortlisted projects and a package of staff recommendations on projects to add to the IASB’s work plan.

Staff recommendation

The staff recommended that the IASB:

  • Add to its work plan a maintenance and consistent application project on climate-related risks, which would aim to:
    • Investigate further the matters raised by respondents and the underlying causes of those matters
    • Consider whether any (and if so, what) narrow-scope actions might be needed.
  • Add to the research pipeline a project on intangible assets, which would aim to comprehensively review IAS 38
  • Add to the research pipeline a project on the statement of cash flows and related matters. The staff also recommend that the IASB consider, as part of its initial work on such a project:
    • Whether the project should aim to comprehensively review IAS 7 or make more targeted improvements
    • Whether to retain or exclude from the project’s scope any of the matters raised by respondents related to the statement of cash flows
  • Create a reserve list of projects that could be added to the work plan if, and only if, additional capacity becomes available
  • Add to the reserve list a project on operating segments. The staff also recommend that if the IASB subsequently decides to add such a project to its work plan, such a project should aim to research:
    • The underlying causes of users’ concerns about the granularity of segment information
    • The feasibility of potential solutions that could be implemented without reconsidering the use of the management approach to determine an entity’s operating segments
  • Add to the reserve list a project on pollutant pricing mechanisms. The staff also recommend that if the IASB subsequently decides to add such a project to its work plan, such a project should aim to develop specific requirements for pollutant pricing mechanisms. However, at the start of such a project, the IASB would consider whether the project should aim to address:
    • All types of pollutant pricing mechanisms, or only some, such as emission trading schemes
    • Accounting by traders and scheme administrators, in addition to scheme participants.
  • Not add to its work plan projects on
    • Cryptocurrencies and related transactions
    • Going concern disclosures

IASB discussion

IASB members largely agreed with the staff recommendation to prioritise two projects on intangibles and cash flow statements. They also agreed with creating a reserve list, although one IASB member suggested to prioritise the reserve list. In his view, a project on pollutant pricing mechanisms, for example, has a higher priority than a project on operating segments. IASB members also agreed with a maintenance and consistent application project on climate-related risks.

One IASB member said that he disagreed with not adding a project for going concern disclosures to the work plan. In his view, more transparency was needed around management judgements. Another IASB member questioned the sensibility of a project on operating segments if the staff already rule out reconsidering the management approach. On cryptocurrencies, it was noted that the reason for not adding a project on this is that they are already covered by IAS 38. However, a project on intangibles may change the scope of IAS 38 and therefore the IASB may need to reconsider cryptocurrencies when discussing the scope of IAS 38.

It was also noted by many IASB members that close collaboration with the ISSB will be required especially on the intangibles and climate-related projects.

IASB decision

All IASB members agreed with the staff recommendation.

Overview of comments on due process (Agenda Paper 24B)

The purpose of this paper was to provide the IASB with an overview of due process comments made by respondents to the RFI. This paper summarised comments on due process along with staff observations on those comments. Comments and the staff’s observations will be communicated to the Due Process Oversight Committee (DPOC) of the IFRS Foundation Trustees.

The comments were grouped as follows:

  • Due process comments on post-implementation reviews (PIRs)
  • Due process comments on agenda decisions
  • Other due process comments

IASB members were asked for questions or comments on the due process comments.

IASB discussion

IASB members discussed comments made by constituents made around agenda decisions. One IASB member said that some of the comments could be addressed if the Interpretations Committee gave guidance on transition for agenda decisions. Other IASB members disagreed, however, and said that agenda decisions only reaffirm the guidance in a standard and therefore, there is nothing to transition from. One IASB member said that agenda decisions are an important tool to address narrow issues in a timely manner. Therefore, aligning the due process for agenda decisions with that of IFRS Accounting Standards is not helpful.

IASB members were not asked to vote on this paper.

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