Improvements Project

Date recorded:

IAS 1, Presentation of Financial Statements

  • The Board discussed whether to retain or remove the 'fair presentation override' in IAS 1. A vote on retention of the override was split 8 in favour of retaining and 6 against retention.
  • The Board agreed, however, that it is necessary to strengthen the wording currently proposed for the exposure draft to (a) restrict the override to 'unique fact patterns' and (b) to use the words 'false and misleading' as opposed to just 'misleading'.
  • A working group of the Board will be set up to explore the options for a mechanism to avoid abuse of the override, either at an overall Board level or in individual jurisdictions.

IAS 17, Leases

  • The Board considered a paper proposing clarification to IAS 17 on how a lease of land and buildings should be treated.
  • The Board agreed that IAS 17 should be amended to clarify that where there is a lease of land and buildings, the land element should be classified as an operating lease in accordance with paragraph 11 of IAS 17 and the building element should be classified as an operating or finance lease applying the normal conditions in IAS 17.
  • Based on discussions at the meeting with liaison standard setters, the Board agreed to eliminate the choice in IAS 17 on how a lessor accounts for initial direct costs incurred in negotiating a lease.

IAS 40, Investment Property

  • The Board agreed that the decision to remove the present choice of accounting for investment properties under either a fair value model or a cost model should be removed from the Improvements Project.
  • The Improvements Exposure Draft will note that the Board intends to address this issue in conjunction with the Performance Reporting project.

IAS 16, Property, Plant and Equipment

  • The Board agreed that IAS 16 should require a components approach for depreciation, but that it should refer to identifying all 'material' components.
  • Regarding cost capitalisation, the Board agreed that references to start-up costs, pre-operating costs, pre-production costs, and similar items should be removed and that more general principles should be provided.

IAS 23, Capitalisation of Borrowing Costs

  • Based on discussions with the liaison standard-setters, the Board agreed to remove from the Improvements Project the issue of whether eliminate the choice in IAS 23 of capitalising borrowing costs that meet certain conditions. At previous meetings, the Board had tentatively decided to remove this option from IAS 23.

Process Issue - Disclosure of Operational Risks

  • The Financial Activities project has identified an issue in relation to the disclosure of operational risks. It has been acknowledged that disclosure of operational risks is a matter for all organisations, not just those engaged in financial activities and, therefore, the proposals being made as part of the IAS 30 project should be considered for all organisations, potentially resulting in a consequential amendment to IAS 1
  • The Board agreed that this is not a matter that can be 'rushed through' the Improvements Project and it was decided that the matter would be dealt with in conjunction with the IAS 30 project.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.