Project update (Agenda Paper 3)

Following the discussion with the IASB in January, the staff have undertaken outreach meetings with different groups of stakeholders, including the Accounting Standards Advisory Forum (ASAF). Most stakeholders are supportive of exploring narrow-scope amendments to better reflect power purchase agreements (PPAs) in the financial statements, both for own use and the hedge accounting requirements. However, concerns were raised for both the own-use and hedge accounting requirements.

The concerns around the own-use assessment relate to the ability to ringfence the application of the potential amendments, the feasibility of requiring an entity to estimate quantities ‘over the life of the contract’ as well as the costs of any disclosure requirements.

In relation to hedge accounting, concerns were raised about making amendments to the requirements more generally that cannot be restricted only to PPAs.

Based on the feedback received, the staff decided to consult further on the characteristics, potential amendments and disclosure requirements proposed, to ensure that stakeholder concerns are appropriately considered. The staff plan to bring the refinements to the potential amendments to the IASB meeting in March 2024 for discussion and decisions on the direction of the project.

IASB discussion

The staff informed the IASB that after the meeting with ASAF, the staff is working on refining the potential amendments. The staff is also having a number of outreach meetings with stakeholders to get their input on the project. Whilst this will delay the draft date of issuing the exposure draft in April, which will be pushed back to early May, the staff believe that the additional time taken now to engage with stakeholders will result in less comments on the exposure draft.

The staff plan to come back to the IASB in the March meeting with some potential amendments, for the IASB to make decisions on, including transition.

No decisions were made.