Update (Agenda Paper 8)

This paper provided an update on the IASB’s work plan since its last update in September 2023. The purpose of this paper was to provide a holistic view of the IASB’s technical projects to support decisions about whether to add or remove projects, as may be discussed in individual project papers and assessment of overall progress on the work plan, including project prioritisation and timing. In response to requests from IASB members, the staff continues to develop a framework to help the IASB make decisions about project prioritisation and timing in between the IASB’s five-yearly agenda consultation. The staff will present the framework to the IASB at a future meeting.

Completed Projects

In September 2023, the IASB published Amendments to the IFRS for SMEs Accounting Standard—International Tax Reform—Pillar Two Model Rules.

New Projects

Active projects

During the period, the IASB made active a maintenance project on

• Updating the new Standard Subsidiaries without Public Accountability: Disclosures. The IASB expects to publish the new Standard in Q2 2024. After this new Standard has been published, the IASB will publish an exposure draft of proposed amendments to that Standard to update it for new or amended disclosure requirements added or amended in other IFRS Accounting Standards after 28 February 2021, the cut-off date for disclosures considered in the new Standard
• An addendum to Exposure Draft Third edition of the IFRS for SMEs Accounting Standard. This addendum will propose amendments to the IFRS for SMEs Accounting Standard to align with the requirements in full IFRS Accounting Standards on supplier finance arrangements and the lack of exchangeability in foreign exchange rates.

Pipeline projects

During the period, the IASB added a project to the pipeline to remove, as part of its next volume of Annual Improvements to IFRS Accounting Standards, the temporary nature of the exemption in IFRS 6 from the application of paragraphs 11-12 of IAS 8.

At its December meeting, the IASB will

• Decide whether to start a pipeline project on Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity
• Consider updated information about whether to start its post-implementation reviews on IFRS 16 and the hedge accounting requirements in IFRS 9

Expected project completions in about the next six months

The staff expects that the IASB will publish the following final standards and amendments in Q2 2024:

• IFRS 18 Presentation and Disclosure in Financial Statements
• IFRS 19 Subsidiaries without Public Accountability: Disclosures
• Amendments to the Classification and Measurement requirements in IFRS 9

Consultation documents in the next six months

The staff expects to publish the following consultation documents in Q2 2024:

• Exposure Draft Business Combinations—Disclosure, Goodwill and Impairment
• Exposure Draft Addendum to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard

IASB discussion

One IASB member mentioned that issues around cash flow statements were still urgent and the pipeline project on cash flow statements should therefore be started as soon as resources become available. The Chair added that repeated criticism from stakeholders is that projects take too long and they suggested to split big projects into several smaller projects to complete them faster. This could be done for cash flow statements as well, if it can be meaningfully split up. One IASB member agreed but said it should not keep the IASB from taking on ambitious questions. Another IASB member said that there is a need to become quicker, especially as with long running projects, stakeholders only get interested later in the process when it may be too late to consider their issues. One IASB member noted that many new projects are now touching on sustainability themes, which is understandable but also take up resources.

The Chair said that he was happy with where the IASB is in terms of its work plan. A way to speed projects up would be to not consult anymore, which he would very much object to. In his view, including stakeholders in the standard-setting is far superior to speed.

Timing of the post-implementation reviews of IFRS 16 Leases and of hedge accounting requirements of IFRS 9 Financial Instruments (Agenda Paper 8A)

The Due Process Handbook requires the IASB to conduct a post-implementation review (PIR) of each new IFRS Standard or major amendment and describes the objective, process and outcomes of a PIR. In September 2022, the IASB discussed clarifications to the description of the objective, process and outcomes of a PIR. Following this discussion and consultation with the Due Process Oversight Committee of the IFRS Foundation Trustees, a clarified description of the PIR process was published on the IFRS Foundation website. This paper considered when the IASB should begin the PIRs of IFRS 16 and the hedge accounting requirements of IFRS 9.

Staff recommendation

The staff recommended that the IASB:

• Begin the PIR of IFRS 16 in Q2 2024
• Consider when to begin the PIR of the hedge accounting requirements of IFRS 9 after the IASB concludes its work on power purchase agreements (PPAs)

IASB discussion

PIR of IFRS 16

In a continuation of the discussion on the previous paper, one IASB member said that resources becoming available should be used on the cash flow statements project, rather than the PIRs, particularly the IFRS 16 PIR. This would also relieve the consultation workload of stakeholders. This was echoed by several IASB members, although others spoke out against delaying the IFRS 16 PIR as it will have been five years of application when the RFI is published if the staff recommendation is followed. Also, there is no option to avoid the PIR and the ideal point in time is now, according to these IASB members. When asked, the staff confirmed that the next alternative for the PIR would be towards the end of 2026, which was seen as too late by many. Especially considering that any amendments that would arise from the PIR would not be finalised before a long time and there are valid user concerns about the information produced by IFRS 16. In addition, stakeholders may be eager to voice their concerns about the standard, rather than burdened by it. One IASB member suggested considering postponing the decision on the timing by six months. This was met with disagreement by many IASB members as they said the discussion in six months would be very similar to the current discussion.

One IASB member asked whether the staff could provide information on where the FASB is with their PIR of the leases standard. The staff replied that the FASB has concluded the implementation support (including limited amendments to the standard) and starts now with outreach and research, with a report expected in 2025 at the earliest.

One IASB member asked how it would affect other projects if the IASB followed the staff recommendation for the IFRS 16 PIR. The staff replied that it depends on several factors. Doing only intangibles, cash flow statements and PIRs would not pose a problem. However, there are other decisions pending on, for example, management commentary that can affect the resource planning. The IASB member asked which would be the time of intense stakeholder consultation for the PIR if the staff recommendation was carried, which was responded with ‘early 2025’ by the staff.

PIR of IFRS 9 hedge accounting requirements

The Chair highlighted that many preparers, mostly banks, are still using IAS 39 for hedge accounting. In addition, insurers are moving just now to IFRS 9. It is therefore worth considering whether the PIR on the hedge accounting requirements should be split by industry. The staff said that it does not see a benefit of splitting the PIR.

One IASB member said that looking at the discussion on the IFRS 16 PIR, if the IASB wanted to wait until the project on PPAs is completed, it would be another five to six years before the PIR could be started. He would not object to that but wanted his fellow IASB members to be aware of that fact. One IASB member replied that it is a resource question as the resources who can work on hedge accounting are tied up by the PPAs and dynamic risk management projects. Other IASB members spoke out in favour of postponing the PIR, given IFRS 9 hedge accounting is optional and given the IASB is working on amendments to the requirements. However, one IASB member suggested not to wait until the project on PPAs is complete but rather make the decision on the timing of the PIR once it becomes clear how extensive the changes to IFRS 9 are.

IASB decision

10 of the 14 IASB members voted in favour of the staff recommendation on the PIR of IFRS 16.

All IASB members voted in favour of the staff recommendation on the PIR of the IFRS 9 hedge accounting requirements.