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July 2020 IASB meeting notes posted

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27 Jul 2020

The IASB met on Wednesday 22 and Thursday 23 July 2020 via video conference to discuss six topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

Disclosure Initiative: Accounting Policies: In August 2019, the Board published the Exposure Draft (ED) Disclosure of Accounting Policies, which proposed amendments to IAS 1 and IFRS Practice Statement 2. At this meeting, the IASB decided to amend the transition requirements to require entities to disclose material accounting policy information for the current period and disclose comparative accounting policy information if it is relevant to understanding the current period’s financial statements. They also decided that the amendments will apply to annual reporting periods beginning on or after 1 January 2023 with early application permitted and that the effective date of the amendments to IAS 8 resulting from the Accounting Policies and Accounting Estimates project be changed to the same date.

Management Commentary: The IASB supported the recommended potential guidance on reporting financial resources. The IASB discussed requirements and possible supporting guidance on reporting progress in managing key matters, a disclosure objective for performance and position; and possible guidance supporting that objective, including on identifying key facets of performance and position that need to be addressed in management commentary. They also discussed measures and indicators.

Extractive Activities: The staff papers summarise their assessment on how activities within the scope of IFRS 6 would be accounted for in the absence of that Standard, applying the requirements in IAS 16 and IAS 38.

The staff concluded that costs incurred during the exploration phases would not meet the requirements of IAS 16 or IAS 38 for recognition as an asset. The staff also assessed expenditure acquiring the legal rights from a third party and concluded that it could meet the definition of an intangible asset and the recognition criteria, but that application of IAS 36 without the specific requirements in paragraphs 18-22 of IFRS 6 would generally lead to an immediate writeoff of exploration and evaluation assets. Applying the guidance in paragraphs 54 and 55 of IAS 38, exploration and evaluation expenditure incurred subsequent to the acquisition of the legal right would be recognised as an expense as it is incurred. No decisions were made.

Maintenance and Consistent Application—Lack of exchangeability: In April, the IASB decided on how to amend IAS 21 to address the accounting when the spot exchange rate is not observable (because of a lack of exchangeability between two currencies). The IASB decided that the proposed changes be applied prospectively. The staff will prepare the ED, which will be open for comment for 120 days.

IBOR Reform and the Effects on Financial Reporting: The IASB discussed feedback on the proposals for qualifying hedging relationships and groups of items. The IASB decided to permit, rather than require, entities to reset cumulative fair values to zero for the purpose of performing the retrospective effectiveness assessment as proposed in paragraph 102S of the ED and confirmed the proposals in the ED related to the accounting for qualifying hedging relationships subject to clarifications and drafting suggestions as explained in the staff analysis. That completes the deliberations and the staff expect to finalise the amendments.

IFRS Taxonomy: The staff expect to finalise the update the IFRS Taxonomy for the COVID-19-related amendments to IFRS 16 with no changes. There was no paper for this session.

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

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