Amendments to IFRS 17 Insurance Contracts: The Board continued its discussions about ED/2019/4 Amendments to IFRS 17. The Board unanimously supported all of the staff recommendations (about the amendments identified in November as not requiring significant redeliberation and about insurance acquisition cash flows and reinsurance contracts held).

IBOR reform and the effects on financial reporting: The Board decided that IFRS 9 and IAS 39 be amended to allow entities to continue a hedging relationship (i.e. no derecognition) when modifications to the interest rate benchmark on which a financial instrument’s contractual cash flows are based are a direct consequence of IBOR reform and are done on an economically equivalent basis.

Accounting policies and accounting estimates (Amendments to IAS 8): The Board gave the Staff permission to prepare the final amendments to IAS 8. They will apply to annual periods beginning on or after 1 January 2022 and are expected to be published in the first half of 2020.

Implementation matters:

Onerous contracts: The Board gave staff permission to prepare the final amendments to IAS 37. They will apply to annual periods beginning on or after 1 January 2022 and are expected to be published in the first half of 2020.

Annual improvements: The Board gave staff permission to prepare the final amendments for annual improvements to IFRS 1 (subsidiary as a first-time adopter), IFRS 9 (fees included in the ‘10 per cent’ test for derecognition of financial liabilities) and IAS 41 (taxation in fair value measurements). The amendments will apply to annual periods beginning on or after 1 January 2022. The amendment to the illustrative example accompanying IFRS 16 takes effect when it is published. Staff do not expect to publish the package of amendments until the second quarter of 2020.

IFRS 3 reference to the Conceptual Framework: The Board decided to confirm the proposal to add, within the section headed ‘Exception to the recognition principle’, an exception to the recognition principle for liabilities and contingent liabilities within the scope of IAS 37 or IFRIC 21. It also decided to clarify that updating the reference to the Conceptual Framework does not change IFRS 3 requirements for recognition of assets and liabilities whose fair values are subject to measurement uncertainty.

Subsidiaries that are SMEs: The Chair of the Australian Accounting Standards Board gave a presentation on their proposal for a simplified disclosure standard, similar to the one the IASB is looking to develop. (It was an information-only session).

Business combinations under common control: The Board decided that the acquisition method, as set out in IFRS 3, be required for transactions that affect non-controlling shareholders of the receiving entity. However, the receiving entity should recognise any excess of the fair value of the acquired identifiable net assets over the consideration transferred as an increase in the receiving entity’s equity (contribution), not as a gain on a bargain purchase in profit or loss.

SME Standard review and update: The Board gave staff permission to prepare the Request for Information, with a comment period of 180 days. 

Financial instruments with characteristics of equity: The Board began its discussion about classifying financial instruments that will, or may, be settled in the issuer’s own equity instruments (both derivative and non-derivative instruments), focusing on what clarifications could be made to the underlying principle of the fixed-for-fixed condition.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.