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IFRS 11 – Classification of joint arrangements

Date recorded:

Agenda Paper 2: Summary of discussion (link to IASB's website)

The Chairman reminded the Committee that they had asked staff to summarise the recent discussions on IFRS 11 in one paper. He proposed not to redebate the topics and asked the Committee only to discuss adding or removing passages to or from the proposed documentation. The project manager said that the two options for addressing the issues were:

  • Option 1: issue a tentative agenda decision; or
  • Option 2: issue educational material.

Option 1 would have a different style of summary than the style normally prevalent in IFRIC Updates but would follow normal procedures, i.e. the tentative agenda decision could be finalised after a comment period in the January 2015 meeting. Option 2 would not need a comment period but would have to be reviewed by at least three IASB members. Publication might therefore be earlier than Option 1. He conceded that Option 2 might not reach the relevant parties who only read the IFRIC Update. The staff therefore recommended Option 1 with the wording proposed in the agenda paper.

One Committee member agreed with the staff’s recommendation. He thought that Option 1 would be more likely to reach the desired outcome on a timely basis. He also agreed that a 60 day comment period would be appropriate. He said that the wording in the decision should be accurate as to issues where the Committee reached a conclusion or issues that were merely discussed by the Committee. As an example he mentioned the question whether accounting for an investor’s interest in a joint operation followed the share of ownership or the share of output purchased. He said that his recollection was that the Committee had not reached a conclusion that the ownership interest was the default method.

Another Committee member also agreed with the staff recommendation but expressed concerns about the length. The Chairman replied that he had thought about that as well and one possible solution would be to split up the one tentative agenda decision in multiple shorter tentative agenda decisions. The Committee member said that these could be appendices to one introductory decision.

A Committee member said that both options presented in the agenda paper were not mutually exclusive as there could be a tentative agenda decision and then the final decision could be followed up with educational material. Also, he expressed concerns that many jurisdictions took agenda decisions as authoritative guidance and therefore warned about formalising decisions more than necessary. The Chairman added that the education department was very sensitive about material that could be seen as an interpretation.

One Committee member said that he preferred a short tentative agenda decision stating that it was too early to answer these questions and waiting for practice to develop and waiting for the subsequent post-implementation review. He said that any guidance would only be finalised in 2015 and practice would have made decisions by then. If the Committee decided to go ahead with the long tentative agenda decision he would prefer splitting it into pieces and suggested extensive redrafting. A fellow Committee member agreed but did only see the need for some redrafting. The Senior Director for Technical Activities recommended splitting the tentative agenda decision into smaller pieces to make it easier for constituents to comment on single issues and to be able to cross-reference the issues into the “green book”.

The Chairman summarised that the publication of the tentative agenda decision might have more impact than any agenda decision before. He felt that this had not been the intention of the Committee. One possible way to address length was hyperlinking agenda papers in the decision. A Committee member disagreed with hyperlinking as this would be likely to cause bigger issues.

The IOSCO representative introduced another alternative, being the publication of a summary of past decisions on the issues.

The Chairman asked which Committee member supported issuing a technical compendium (whether in one piece or in five pieces). 9 of 13 Committee members voted in favour. He then asked who preferred a single document. Only 2 of the 13 Committee members voted in favour of a single document. 3 Committee members agreed to help with the redrafting of the tentative agenda decision. The Chairman concluded that the Committee should rather aim for a good product than for a fast product.

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