Annual Improvements Process

Date recorded:

IAS 39 Financial Instruments: Recognition and Measurement

The Board agreed to remove the references to segment reporting in paragraph 73 of IAS 39. These were 'missed' in the consequential amendments to the adoption of IFRS 8 Segment Reporting.

The amendment would clarify that under IFRS 8 an entity that reports its segments to the chief operating decision maker on the basis of its risk management strategy would not be required to designate and document hedge relationships in order to achieve hedge accounting at the segment level. (That is, informal inter-segment hedging is permitted.)


IAS 16 Property, Plant and Equipment - Inconsistency in the definition of recoverable amount

The issue was whether a perceived inconsistency in the definition of 'recoverable amount' in IAS 16 should be removed. This item was removed from discussion by the staff, as it will be addressed as part of Business Combinations Phase II.


IAS 40 Investment Property - Fair value of investment property held under a lease

The Board approved a proposal that paragraph 50(d) of IAS 40 be amended, such that, "it will be necessary to add back any recognised lease liability, to arrive at the carrying amount of the investment property using the fair value model." (emphasis added)

The Board noted that the current wording in IAS 40 is misleading as it implies that the fair value of an investment property under a lease does not include its lease liability.


IAS 19 Employee Benefits - Contingent liabilities

The Board agreed to remove the reference to recognising contingent liabilities in paragraph 32B of IAS 19. The Board agreed that this paragraph conflicts with paragraph 27 of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which states that an entity should not recognise a contingent liability.


IAS 19 Employee Benefits - Short term employee benefits

The Board approved a proposal that the definition of short-term employee benefits in paragraph 7 of IAS 19 be amended, such that the term 'fall due' is replaced by 'expected to be settled'. The purpose of the amendment is to remove the perceived conflict with the term 'expected to occur' in paragraph 8 of IAS 19. The Board noted that the expected timing of settlement of the benefit should drive the classification.


Boundaries of the annual improvement process

The Board agreed that any changes to a Standard should be brought to the Board as part of the Annual Improvements Process, whereas the Director of Technical Activities could use her discretion with respect to amendments to Implementation Guidance, etc. However, given that IFRIC is often asked to resolve conflicts between Standards and Implementation Guidance, the Director of Technical Activities would work closely with the Director of IFRIC Activities in exercising this discretion.


IFRS 1 First-time Adoption of International Financial Reporting Standards

Following the decisions made in the February meeting the Board discussed the draft of a restructured version of IFRS 1. The draft itself was omitted from the observer notes.

The Board agreed that:

  • The restructured IFRS 1 will be pre-balloted as part of the Annual Improvements Exposure Draft.
  • The effective date will be 1 January 2009 with no scope for early adoption
  • The new version of IFRS 1 will be approved as a new Standard, i.e. the current version of IFRS 1 will be withdrawn
  • Any transitional provisions that are not relevant for an entity that adopts IFRSs for the first time on or after 1 January 2009 will be deleted.
  • The exposure draft of the restructured Standard would be in clean-text only, except that:
    • the paragraph number in the current Standard would be included [as struck-out text] so that constituents could identify the source of paragraphs in the restructured Standard; and
    • Mark-up format would be used for deletions or amendments to existing bits of IFRS 1.
  • The Basis for Conclusions and the Implementation Guidance will be excluded from the Exposure Draft [because no changes are proposed to these].
  • The Appendices will be reordered as follows:
    • Exceptions
    • Exemptions (Business combinations, permanent exemptions and short-term exemptions)

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.