Pre-meeting summaries for the December 2022 IASB meeting

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09 Dec, 2022

The IASB meets in London on Tuesday 13, Wednesday 14 and Thursday 15 December 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.

Financial Instruments with Characteristics of Equity (FICE)

The staff recommend that no changes are made to the presentation requirements in IAS 32 for equity instruments or to specifically address financial liabilities containing contractual obligations to pay amounts based on the entity’s performance or changes in the entity’s net assets. However, the staff recommend entities with these types of financial liabilities measured at fair value through profit or loss be required to disclose the total gains or losses recognised in profit or loss in each reporting period that arise from remeasuring such financial liabilities.

Work Plan

The staff expects that the IASB will conclude its post-implementation review (PIR) of the classification and measurement requirements in IFRS 9 with the publication of its Feedback Statement in December 2022. The staff also expects that the IASB will conclude its Disclosure Initiative—Targeted-Standards Level Review of Disclosures with the publication of its Project Summary in Q1 2023. In addition, the staff expects that the IASB will issue final amendments for International Tax Reform—Pillar Two Model Rules and Supplier Finance Arrangements in Q2 2023.

Rate-regulated Activities

The staff recommend that an entity not recognise inflation adjustments to the regulatory capital base as a regulatory asset. They also recommend that an entity recognise a regulatory asset (regulatory liability) relating to an allowable expense or performance incentive included in its regulatory capital base when there is a direct relationship between the entity’s regulatory capital base and its property, plant and equipment, and the entity has an enforceable present right (obligation) to add (deduct) the allowable expense or performance incentive to (from) future regulated rates. An entity would not recognise a regulatory asset (regulatory liability) relating to an allowable expense or performance incentive included in its regulatory capital base when there is no direct relationship between the entity’s regulatory capital base and its property, plant and equipment.

Maintenance and consistent application

The IASB will discuss matters raised in the feedback on the Exposure Draft (ED) Lack of Exchangeability. The staff recommend that the IASB proceed with its proposals in the ED with some changes. For factors to consider when assessing exchangeability, clarify that an entity does not consider ‘unofficial markets’ in assessing exchangeability but, when exchangeability is lacking, it can use exchange rates from these markets to estimate the spot exchange rate and that all factors are to be considered holistically. For determining the spot exchange rate—the staff recommend to amend proposed paragraph 19A to state that an entity’s objective in estimating the spot exchange rate is to reflect at the measurement date the rate at which an orderly exchange transaction would take place between market participants under prevailing economic conditions.

Equity Method

In this session, the IASB will discuss applying the preferred approach after purchase of an additional interest in an associate and two application questions. The staff recommend the IASB proceed with the view that an investor is measuring a single investment in the associate rather than layers of the investment in the associate. The staff also recommend that an investor that has reduced its interest in an associate to zero does not recognise the unrecognised losses from the cost of the additional interest in the associate. Lastly, the staff recommend that an investor recognises its share of comprehensive income until its interest in the associate is reduced to zero.

Goodwill and Impairment

The staff recommend that the IASB move the project from the research programme to the standard-setting work plan.

Digital Financial Reporting Strategy

This paper sets out a strategic framework that is intended to provide strategic direction and boundaries to help identify possible digital financial reporting activities that the IASB could undertake and provide consistent language for communicating the digital financial reporting strategy. There are no recommendations.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The staff recommend that the IASB confirms its proposals in the draft Standard, that the application of the disclosure requirements in IFRS 8, IFRS 17 and IAS 33 remain applicable for a subsidiary applying the Standard, and reduced disclosure requirements for IAS 34 in the Standard.

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

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