IFRS 13 — Post-implementation Review — Phase 1 outreach

Date recorded:

IFRS 13 Fair Value Measurement — Post-implementation Review — Phase 1 outreach — Agenda paper 12

The purpose of this session was to discuss the feedback received from stakeholders on the implementation of IFRS 13 and to ask the IC for comment.

The Staff noted that many stakeholders expressed concern about the usefulness and quality of preparation of fair value disclosures, in that they were often generic and did not address the entity’s specific circumstances.


Quite a few IC members noted that applying IFRS 13 was a real challenge in emerging markets (e.g. in Africa and other developing countries) and they noted that entities were not determining fair values properly in those jurisdictions. This was because firstly, the markets were not as liquid and as developed as other countries so getting a fair value was very difficult for them; and secondly, the absence of readily observable fair value information meant that the entities had to develop their own approaches to valuation yet there was a lack of valuation expertise and experience in those jurisdictions to carry out the modelling properly. The reliability and sources of inputs to those models were also of concern. Adding to those challenges was the fact that IFRS 13 did not provide sufficient guidance on what were the appropriate approaches in valuing different items in different circumstances.

One IC member noted in particular that different valuation methodologies applied to different asset classes, e.g. investment properties, intangible assets, businesses, financial instruments, biological assets etc. Many IC members suggested that it would be helpful if the Board could provide more guidance and actual examples, or arrange experience sharing sessions, on what were the appropriate methodologies for valuing the different asset classes.

As for the IFRS 13 disclosures being boilerplate, many IC members believed that this was due to a lack of a clear and focused objective for the IFRS 13 disclosures. The IC suggested that IFRS 13 could be improved by setting out a clear objective as to what it is that the Standard wanted people to understand, which should in turn guide entities in providing the necessary, and hopefully more entity-specific, disclosures.

The IC also brought up the following areas of difficulties in applying IFRS 13:

  • Categorisation in the fair value hierarchy. An IC member asked the Staff to consider whether there was sufficient guidance on determining the significance of an input in assessing which level of the hierarchy a fair value measurement should be categorised. The IC member said that in his experience, a lot of additional explanation had to be given to entities to guide them in arriving at the right answer.
  • Fair value determinations of (i) assets and liabilities on business combinations, and (ii) biological assets.
  • When using a level 1 input, entities were unsure of whether, and if so, what adjustments should be made to the P*Q amount. Entities were also not clear about what constituted a control premium.

A few IC members suggested that the Staff carry out a request for information to seek feedback directly from stakeholders on particular issues. Furthermore, they suggested that the Staff should reach out to entities in the emerging markets where there were real challenges in determining fair values to assess their guidance needs.

The Chairman noted on the side that the Staff would need assistance on drafting the valuation guidance.

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