Date recorded:

The IASB met in London from 18-20 October 2022. The following items were discussed:

Rate-regulated Activities

The IASB decided that the final Accounting Standard retains the definition of allowable expense proposed in the ED, clarifies that a regulatory agreement may determine the amount that compensates for an allowable expense using the same or a different basis from the basis an entity uses for measuring the allowable expense in accordance with IFRS Accounting Standards; and clarifies the treatment of allowable expenses based on benchmarks and includes examples to help entities identify differences in timing in those cases. The IASB also decided that the final Accounting Standard retain the proposals in the ED for entities to account for regulatory assets or regulatory liabilities arising from differences between the regulatory recovery period and assets’ useful lives when there is a direct relationship between an entity’s regulatory capital base and its property, plant and equipment; provides guidance to help entities determine when there is no direct relationship between their regulatory capital base and their property, plant and equipment; and requires entities that have concluded there is no direct relationship between their regulatory capital base and their property, plant and equipment to provide disclosures to enable users of financial statements to understand the reasons for their conclusion.

Contractual Cash Flow Characteristics

The IASB decided that IFRS 7 be amended to require disclosure of, for each class of financial assets and financial liabilities not measured at fair value through profit or loss, a qualitative description of the nature of the contingent events that could change the timing or amount of contractual cash flows; quantitative information about the potential range of changes to contractual cash flows that could result from the contractual terms; and the gross carrying amount of financial assets and amortised cost financial liabilities subject to these contractual terms. The effective date would be set after the proposals have been exposed.

Equity Method

The purpose of this meeting was to review the progress of the equity method research project. The staff acknowledged that developing solutions to the application questions has taken longer than anticipated, but they still think it is possible to develop solutions. The IASB decided to continue the research project with its current objective and approach. 

IFRS Taxonomy

The IASB decided to shorten the comment period to 30 days for the Proposed IFRS Accounting Taxonomy Update for Lease Liability in a Sale and Leaseback and Non-current Liabilities with Covenants

Maintenance and consistent application

The IASB has on its work plan a project to make three targeted improvements to IAS 37, including one in relation to the discount rate an entity applies in measuring a provision. The IASB is considering developing proposals to specify in IAS 37 whether that rate should reflect its own performance risk. The staff are gathering information to help the IASB reach a tentative decision on this question at a future meeting. In addition, no IASB members objected to the publication of three IFRS Interpretations Committee agenda decisions: Multi-currency Groups of Insurance Contracts (IFRS 17 and IAS 21); Special Purpose Acquisition Companies (SPAC)—Accounting for Warrants at Acquisition; and Lessor Forgiveness of Lease Payments (IFRS 9 and IFRS 16).

Disclosure Initiative—Targeted Standards-level Review of Disclosures

The IASB decided to develop a middle ground approach to drafting disclosure requirements with the aim of providing a better framework for entities to use judgement to identify and disclose useful information to users of financial statements. Applying such an approach, disclosure objectives would be accompanied by a prescriptive list of items of information that an entity should disclose to meet the objectives. The IASB decided to publish the Guidance for the Board as a document posted on the IFRS Foundation website. Furthermore, the IASB decided not to proceed with any further work on the disclosure requirements in IFRS 13 and IAS 19.

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

The staff are not recommending any changes to the requirements in IFRS 9. However, to increase the usefulness and transparency of information provided about the overall performance of equity investments for which the OCI presentation election was made, the staff recommend amending paragraph 11A of IFRS 7 to require disclosure of the aggregated fair value of equity investments for which the OCI presentation option is applied at the end of the reporting period and changes in fair value recognised in OCI during the period. The IASB also decided to continue to consider as part of this review the accounting for BACS transfers and to explore permitting the derecognition of financial liabilities before settlement date if specified criteria are met. The staff plan to bring a paper back in November.

Disclosure Initiative—Subsidiaries without public accountability: Disclosures

In this session, the IASB discussed the objective and structure of the new standard and the approach to developing disclosure requirements. The IASB agreed with all of the staff recommendations.

Goodwill and Impairment

The purpose of this meeting is to initiate the IASB’s discussion on the subsequent accounting for goodwill. The IASB will not be asked to make any decisions at this meeting. The staff reminded the IASB of its preliminary decision to retain the impairment-only model for the subsequent accounting of goodwill. The staff also provided an overview of respondents’ feedback on the Discussion Paper (DP) and a summary of additional information and recent developments since the feedback on the DP. No decisions were made, but the IASB indicated that it has sufficient information to be in a position to make a decision at a future meeting.

ISSB Update

The ISSB Chair gave an overview of the first meetings of the ISSB, including this week’s meeting and decisions made to date. The ISSB Chair reiterated the importance of building a global baseline for sustainability reporting and therefore, the ISSB is working closely with the European Financial Reporting Advisory Group (EFRAG) who is currently developing European Sustainability Reporting Standards (ESRS). He also listed the various consultative groups that have been established over the last few months to inform the standard-setting process of the ISSB.

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