Comment letters on tentative agenda decisions

IFRS 17 Insurance Contracts and IAS 21 The Effects of Changes in Foreign Exchange Rates—Multi-currency Groups of Insurance Contracts: In June 2022, the Committee published a tentative agenda decision in response to a submission about how to account for insurance contracts that generate cash flows in more than one currency. Most of the respondents agreed (or did not disagree) with the Committee’s conclusion regarding identifying portfolios of insurance contracts. 11 out of 18 respondents agreed (or did not disagree) with the Committee’s conclusions regarding the measurement of a multi-currency group of insurance contracts and 7 respondents expressed concerns that an entity could develop a multi-currency accounting policy.

Special Purpose Acquisition Companies (SPAC): Accounting for Warrants at Acquisition: In March 2022, the Committee published a tentative agenda decision on how an entity accounts for warrants on acquiring a SPAC. Most respondents agreed (or did not disagree) with the technical analysis and conclusions but raised concerns about the potential unintended consequences.

IFRS 9 Financial Instruments and IFRS 16 Leases— Lessor Forgiveness of Lease Payments:  In March 2022, the Committee published a tentative agenda in response to the submission about a lessor’s application of IFRS 9 and IFRS 16 in accounting for a particular rent concession for which the only change to the lease contract is the lessor’s forgiveness of lease payments due from the lessee under that contract. 11 out of 23 respondents agreed with the analysis of the Committee but requested clarification on some aspects of the analysis while 11 respondents disagreed with the Committee’s analysis and conclusion.

After analysing the comments from the respondents, the staff recommend finalising all three agenda decisions with some suggested changes.

Input on IASB project

Amendments to IAS 21—Lack of Exchangeability: In April 2021, the IASB published Exposure Draft ED/2021/4 Lack of Exchangeability, which proposed amendments to IAS 21. The purpose of the project is to assess the need to add requirements on how an entity determines whether a currency is exchangeable into another currency and the accounting requirements to apply when it is not. To assist the staff in developing recommendations for the IASB, the staff is asking Committee members for their views on one of the proposals in the ED—determining the spot exchange rate when exchangeability is lacking.

Matters reported to the IASB: The staff have reported several of the Committee’s matters to the IASB but have not identified any matters to recommend for further discussion by the Committee. There were various matters that the IASB is considering as part of its work plan, may consider as part of its future work plan or considered and decided (or tentatively decided) not to add to the work plan.

Work in progress: There are no new matters that have not been presented to the Committee.

The full agenda for the meeting and our com­pre­hen­sive pre-meet­ing summaries can be found here.