Pre-meeting summaries for the October 2022 IASB meeting

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14 Oct, 2022

The IASB meets in London on 18-20 October 2022. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. We summarised 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.

The following topics are on the agenda:

Rate-regulated Activities

The staff recommend that the final Accounting Standard retains the definition of allowable expense proposed in the ED, clarifies that a regulatory agreement may determine the amount that compensates for an allowable expense using the same or a different basis from the basis an entity uses for measuring the allowable expense in accordance with IFRS Accounting Standards; and clarifies the treatment of allowable expenses based on benchmarks and includes examples to help entities identify differences in timing in those cases. The staff also recommend that the final Accounting Standard retains the proposals in the ED for entities to account for regulatory assets or regulatory liabilities arising from differences between the regulatory recovery period and assets’ useful lives when there is a direct relationship between an entity’s regulatory capital base and its property, plant and equipment; provides guidance to help entities determine when there is no direct relationship between their regulatory capital base and their property, plant and equipment; and requires entities that have concluded there is no direct relationship between their regulatory capital base and their property, plant and equipment to provide disclosures to enable users of financial statements to understand the reasons for their conclusion.

Contractual Cash Flow Characteristics

The staff recommend that IFRS 7 be amended to require disclosure of, for each class of financial assets and financial liabilities not measured at fair value through profit or loss, of a qualitative description of the nature of the contingent events that could change the timing or amount of contractual cash flows; quantitative information about the potential range of changes to contractual cash flows that could result from the contractual terms; and the gross carrying amount of financial assets and amortised cost financial liabilities subject to these contractual terms. The effective date would be set after the proposals have been exposed.

Equity Method

The purpose of this session is to review the progress of the equity method research project. The staff acknowledge that developing solutions to the application questions has taken longer than anticipated, but they still think it is possible to develop solutions. The IASB is being asked whether they agree to continue the research project with its current objective and approach. 

IFRS Taxonomy

The staff recommends a 30-day comment period for the Proposed IFRS Accounting Taxonomy Update for Lease Liability in a Sale and Leaseback and Non-current Liabilities with Covenants

Maintenance and consistent application

The IASB has on its work plan a project to make three targeted improvements to IAS 37, including one in relation to the discount rate an entity applies in measuring a provision. The IASB will consider developing proposals to specify in IAS 37 whether that rate should reflect its own performance risk. The staff are gathering information to help the IASB reach a tentative decision on this question at a future meeting. The IASB will be asked if any members object to the publication of three IFRS Interpretations Committee agenda decisions: Multi-currency Groups of Insurance Contracts (IFRS 17 and IAS 21); Special Purpose Acquisition Companies (SPAC)—Accounting for Warrants at Acquisition; and Lessor Forgiveness of Lease Payments (IFRS 9 and IFRS 16).

Disclosure Initiative—Targeted Standards-level Review of Disclosures

The staff recommend that the IASB develop a middle ground approach to drafting disclosure requirements with the aim of providing a better framework for entities to use judgement to identify and disclose useful information to users of financial statements. Applying such an approach, disclosure objectives would be accompanied by a prescriptive list of items of information that an entity should disclose to meet the objectives. The staff further recommend the IASB publish the Guidance for the Board as a document posted on the IFRS Foundation website. Furthermore, the staff recommend that the IASB not proceed with any further work on the disclosure requirements in IFRS 13 and IAS 19.

Post-implementation Review (PIR) of IFRS 9—Classification and Measurement

The staff are not recommending any changes to the requirements in IFRS 9. However, to increase the usefulness and transparency of information provided about the overall performance of equity investments for which the other comprehensive income (OCI) presentation election was made, the staff recommend amending paragraph 11A of IFRS 7 to require disclosure of the aggregated fair value of equity investments for which the OCI presentation option is applied at the end of the reporting period and changes in fair value recognised in OCI during the period.

Disclosure Initiative—Subsidiaries without public accountability: Disclosures

In this session, the IASB will discuss the objective and structure of the new Standard and the approach to developing disclosure requirements.

Goodwill and Impairment

The purpose of this meeting is to initiate the IASB’s discussion on the subsequent accounting for goodwill. The IASB will not be asked to make any decisions at this meeting. The staff remind the IASB of its preliminary decision to retain the impairment-only model for the subsequent accounting of goodwill. The staff also provide an overview of respondents’ feedback on the DP and a summary of additional information and recent developments since the feedback on the DP.

ISSB Update

There is no paper for this session.

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

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