Date recorded:

The IASB met in London on Tuesday 22, Wednesday 23 and Thursday 24 November 2022. The following topics were discussed:

Post-implementation Review (PIR) of IFRS 9—Classification and Measurement

The IASB discussed financial liabilities and own credit. The IASB confirmed that it is satisfied that the project can be concluded. The next step will be the publication of a Report and Feedback Statement.

Dynamic Risk Management             

The IASB discussed managing equity and notional alignment of designated assets and liabilities. The IASB decided that equity not be an eligible item in the DRM model. The IASB also agreed to amend its original tentative decision to not require the notionals of eligible assets, liabilities and future transaction for designation in the current net open risk position to be the same.

Rate-regulated Activities

At this meeting, the IASB continued redeliberating the proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities. The IASB decided that when there is a direct relationship between an entity’s regulatory capital base and its property, plant and equipment and the regulatory agreement provides the entity with both a debt and equity return on an asset not yet available for use, the entity must reflect in the statement of financial performance during the construction period only those returns in excess of the entity’s capitalised borrowing costs. If there is only a debt return on an asset not yet available for use, the entity must not reflect the return in the statement of financial performance during the construction period if the entity capitalises its borrowing costs.

Maintenance and consistent application

International Tax Reform (Pillar Two Model Rules)—the IASB decided to amend IAS 12 to introduce a temporary exception from accounting for deferred taxes arising from legislation enacted to implement the OECD’s Pillar Two model rules (including any qualified domestic minimum top-up tax). The exception would apply until such time that the IASB decides to either remove it or make it permanent.

Supplier Finance Arrangements—the IASB decided to proceed with its proposals in the ED with some changes.

Amendments to the Classification and Measurement of Financial Instruments

The IASB discussed a sweep issue related to contractually linked instruments (CLI) and the derecognition requirements in IFRS 9 for the settlement of a financial asset or a financial liability via electronic cash transfers. The IASB decided to clarify that when determining whether a transaction is in the scope of the CLI requirements, an entity excludes any instruments held by the sponsor that has transferred the underlying assets to the issuer. For electronic transfers, the IASB also decided to clarify that an entity applies settlement date accounting when recognising and derecognising financial assets (except for regular way transactions) and financial liabilities. In relation to the accounting alternative for derecognising a financial liability before settlement date, the IASB decided to refine the criteria to require an entity to have no ability to withdraw, stop or cancel an electronic payment instruction; to have lost the practical ability to access the cash as a result of the electronic payment instruction; and the settlement risk associated with the electronic payment instruction to be insignificant.

Goodwill and Impairment

The IASB decided to retain the impairment-only model for goodwill.

Business Combinations under Common Control (BCUCC)

The IASB continued discussing the selection of the measurement method to apply to a BCUCC. The staff set out their initial views, but did not make any recommendations. The IASB agreed with the general direction set out in its preliminary views to, in principle, apply the acquisition method to a BCUCC that affects non-controlling shareholders but that the IASB should consider some potential exceptions. If the BCUCC does not affect non-controlling shareholders a book-value method would apply, with no exceptions.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The IASB confirmed that the subsidiaries eligible to apply the Standard are a ‘subsidiary at the end of the reporting period’ that has an ultimate or intermediate parent that produces consolidated financial statements complying with IFRS Accounting Standards. The IASB also decided, by a bare majority, not to proceed with the proposal that the parent’s consolidated financial statements are ‘available for public use’.

An analysis of how the IASB’s work plan has changed after the meeting is available on https://www.iasplus.com/en/news/2022/11/iasb-issb-work-plan.

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