Technical Correction Policy

The Board agreed not to pursue its proposed technical correction policy. It concluded that the experience of Proposed Technical Correction 1 had demonstrated that it was not a good way to amend an existing Standard. The Board had an Exposure Draft policy in place and was able to issue proposals for comment for a period of not less than 30 days in limited circumstances. This policy had been used in the past and is addressed in the forthcoming IASB Due Process Handbook.

Technical Correction 1 - Amendment to IAS 21

The staff introduced the results of exposure of Proposed Technical Correction 1 and its proposed changes to the text as a result of that exposure.

The Board agreed to amend IAS 21, paragraph 15 as follows:

An entity or any of its subsidiaries may have a monetary item that is receivable from or payable to a foreign operation. An item for which settlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the entity's net investment in that foreign operation and is accounted for in accordance with paragraphs 32 and 33. Such monetary items may include long-term receivables or loans. They do not include trade receivables or trade payables.

This amendment was limited to situations in which control exists. The Board considered a proposal to extend paragraph 15 to associates and joint ventures, but confirmed its original intention that the situation addressed in TC 1 was limited to control situations. That is, an entity cannot control the reversal of a component of a net investment in an associate or joint venture.

Other decisions:

• The Board agreed to make IAS 21 paragraph 15A more explicitly an example of the application of the principle in paragraph 15.
• The Board agreed to delete proposed paragraph 15B and the related paragraph BC 7.
• The Board confirmed the proposed change to IAS 21 paragraph 33.
• The Board deleted the proposed change to IAS 28 paragraph 29.
• The Board confirmed the proposed effective date of 1 January 2006, early adoption permitted.

The staff raised an issue related to IFRS 1 First-time Adoption of IFRS that had been identified earlier that day. Initial reactions were that a first-time adopter adopting the Amendment would not have a problem on transition. EU endorsement and other considerations might create problems, but the staff was not yet in a position to offer advice.