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IFRS 7 — Applicability of the amendments to IFRS 7 to condensed interim financial statements

Date recorded:

In January 2013, the Committee received a request for guidance on the applicability of the amendments to IFRS 7 Financial Instruments: Disclosures contained in Disclosure–Offsetting Financial Assets and Financial Liabilities issued in December 2011 (‘Amendments to IFRS 7’) to condensed interim financial statements. The submitter asked Committee to clarify the meaning of “interim periods within those annual periods” as used in paragraph 44R of IFRS 7. The submitter noted that there was uncertainty about whether the additional disclosure required by the Amendments to IFRS 7 should be included in condensed interim financial statements prepared in accordance with IAS 34 Interim Financial Reporting.

In its March 2013 meeting, the Committee noted that the current wording of paragraph 44R has the potential to lead to divergent interpretations and requested the staff to consult the IASB in order to determine what the IASB’s intention was.

At the April 2013 IASB meeting, the staff consulted the IASB on this issue. The IASB agreed that the additional disclosure required by the Amendments to IFRS 7 is not specifically required for all interim periods after the first year of application of the Amendments to IFRS However, the additional disclosure is required to be given in condensed interim financial statements prepared in accordance with IAS 34 when its inclusion would be required in accordance with the requirements of IAS 34.

Staff proposed to the Committee that it too late to clarify the offsetting disclosure for 2013 as some organisations may have already prepared their interim accounts and therefore proposed to the Committee that from 2014 onwards the offsetting disclosure are required to be given in the condensed interim financial statements when their including would be required by IAS 34. In addition, staff recommended that it should recommend to the IASB to clarify paragraph 44R of IAS 19 Employee Benefits by deleting the reference to “interim periods within those annual periods”.

Within the debate between members, there was disagreement with staff that it was not too late to make the amended for financial year 2013. Another member raised the issue that there may be firms subject to disciplinary action should they not adopt the changes in the standard, and therefore it was suggested that IAS 34 should be final and should apply. Due to the urgency of the issue, members suggested the amendment would have to be raised earlier rather than waiting for clarification and therefore suggested a separate amendment should be issued.

In conclusion, the Committee recognised the need to urgently address this issue for those who will have to apply the standard and therefore suggested issuing both an agenda decision and an amendment for clarification to the standard, which would be tracked through annual improvements.

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