Pre-meeting summaries for the February 2022 IASB meeting

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18 Feb, 2022

The IASB meets in London over four days, from Monday 21 to Thursday 24 February 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:

Dynamic Risk Management (DRM)

When developing the core model for DRM, the IASB tentatively decided that when derivatives align the asset profile with the target profile, the changes in fair value of such derivatives are recognised in other comprehensive income (OCI). Volatility in equity arising from the recognition of fair value changes in OCI was one of the three main challenges identified as key to the viability and operability of the DRM model. The staff explore two potential alternatives for the mechanics the IASB could consider for the DRM model. Both approaches aim to better reflect the risk management activities in the financial statements and address the concerns raised during outreach. At this meeting, the staff seek the IASB’s view on the direction of the future work, without asking the IASB to make any decisions.

Disclosure Initiative—Targeted Standards-level Review of Disclosures

The comment period for ED/2021/3 Disclosure Requirements in IFRS Standards—A Pilot Approach closed on 12 January. The purpose of this meeting is to provide a summary of the fieldwork findings and feedback received from these stakeholders and ask the IASB if it has any questions or comments.

Rate-regulated Activities

The staff recommend the IASB reconfirm the proposal to require an entity to apply the final Standard to all its regulatory assets and regulatory liabilities. The ED does not specify whether a particular type of body, such as a regulator, is required for a regulatory asset or regulatory liability to exist. The staff recommend the final Standard includes the existence of a regulator in the conditions that are necessary for a regulatory asset or regulatory liability to exist.

Financial Instruments with Characteristics of Equity

The staff ask the IASB to make tentative decisions on proposed clarifications related to the classification of financial instruments applying IAS 32 when payment is at the discretion of the issuer’s shareholders. The staff recommend that the IASB include, as application guidance in IAS 32, factors that may be relevant for an entity to consider in assessing whether a decision of shareholders is within the control of the entity in classifying financial instruments as financial liabilities or equity.

Primary Financial Statements

The staff consider the relationship between the general principle of disaggregation for the presentation of information in the primary financial statements and the requirements in IAS 1 for specific line items in those statements. The staff also consider the feedback on the proposals for required line items.

Third Agenda Consultation

At this meeting, the IASB continues its discussions of the feedback received on the Request for Information (RfI), relating to projects on the current work plan; cross-cutting themes—capacity implications; connectivity; partnering further with national standard-setters; priority of matters identified in post-implementation reviews; and strategic direction and balance of the IASB’s activities from 2022 to 2026.

Maintenance and Consistent Application

Availability of a Refund (Amendments to IFRIC 14): In 2015, the IASB proposed narrow-scope amendments to IFRIC 14. The staff recommend that the IASB withdraw the project from its work plan.

Provisions—Targeted Improvements—Project review: The IASB has on its work plan a project to make targeted improvements to IAS 37. The IASB has not discussed this project for some time. The purpose of this meeting is to review the project’s prospects for progress and decide whether to keep the project on the IASB’s work plan. The staff recommend that the IASB keep the project on its work plan.

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)—Transition, effective date and due process: In December 2021, the IASB decided to proceed with its proposed amendments to IFRS 16 published in ED/2020/4 Lease Liability in a Sale and Leaseback, with some changes to the proposals. At this session, the staff ask the IASB whether it agrees with the staff’s recommendation with respect to the transition requirements and effective date for the amendments to IFRS 16. In the staff’s view entities would have sufficient time to prepare for the new requirements if the IASB were to set an effective date of annual reporting periods beginning on or after 1 January 2024.

Post-implementation review of IFRS 10-12

The staff summarise the work undertaken in the PIR. The IASB will be asked whether it agrees that sufficient work has been completed to conclude the PIR and for the staff to prepare the Report and Feedback Statement on the PIR.

Second Comprehensive Review of the IFRS for SMEs Standard

At this meeting, the IASB will continue to deliberate specific sections of the IFRS for SMEs Standard that could be aligned with IFRS Accounting Standards, amendments to IFRS Accounting Standards and IFRIC Interpretations in the scope of the second comprehensive review of the IFRS for SMEs Standard: IFRS 9 Financial Instruments (Impairment of Financial Assets); IFRS 15 Revenue from Contracts with Customers; cryptocurrency; recognition and measurement of development costs; IFRS 3 Business Combinations (Definition of a Business and Reacquired Rights); and the alignment with IFRS 3, IFRS 10 and IFRS 11).

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

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