Pre-meeting summaries for the February 2021 IASB meeting

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12 Feb, 2021

The IASB is meeting on Tuesday 16 and Wednesday 17 January 2021, by video conference. We have posted our pre-meeting summaries for the meetings that allow you to follow the IASB’s decision making more closely. For each topic to be discussed, we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

Financial Instruments with Characteristics of Equity: The Board will discuss potential disclosures that could be developed as part of the FICE project, although the staff are not seeking any decisions. The Board will also discuss the classification of particular financial instruments that contain obligations that arise only on liquidation of the entity, which IAS 32:16 classifies as equity. The 2018 DP proposed that at least some of these instruments should be classified as financial liabilities. The staff now believe that the information needs of users of financial statements could be met by supplementing the existing IAS 32 classification requirements with new presentation and disclosure requirements rather than changing the classification. The Board will be asked if it agrees with that view. 

Management Commentary: The Board will consider several issues identified during the drafting of the ED for the revised Practice Statement, mainly as a result of feedback from reviewers: (a) the status of the Practice Statement and how it compares to the status of the Materiality Practice Statement; (b) materiality—the staff recommend that the Practice Statement definition of material information should refer to the decision investors and creditors make on the basis of the management commentary and the related financial statement; (c) thresholds—clarifying why the ED uses the terms ‘key’, ‘fundamental(ly)’, ‘severely’ and ‘underpin’, and explaining how those terms relate to the materiality threshold; (d) long-term prospects, intangible resources and relationships and ESG matters—the staff suggest restructuring the appendix by providing a more summarised description of applicable requirements and guidance.

Extractive Activities: The Board will have a non-decision making session in which the staff will explain the life-cycle of a minerals and oil and gas property; the activities that are performed in the different phases of that life-cycle; and the financial reporting challenges associated with those different phases.

Agenda Consultation: The staff are seeking permission to publish the Request for Information, which will lead to the Board setting priorities for 2022 to 2026. The staff recommend 120 days as a comment period. Although this is shorter than the normal 180-days previously provided, they think that commenting on a strategic consultation should require less time for respondents.

Disclosure Initiative—Subsidiaries that are SMEs: The staff are seeking permission to begin the balloting process for the ED, and is recommending a 120-day comment period.

There will also be an oral update for the SME Standard review.

Our pre-meet­ing summaries are available on our February meeting notes page and will be sup­ple­mented with our popular meeting notes after the meeting.

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