Finalisation of Annual Improvements to IFRSs 2012-2014 cycle – summary of due process followed

The project manager said that the session was to take the final steps in the 2012-2014 Annual Improvement cycle. She began by asking the Board whether they agreed with not re-exposing the amendments. The Board agreed.

She asked whether they also agreed with the mandatory effective date of 1 January 2016. One Board member asked whether the amendments should be required to be applied as a package as she was concerned about too many combinations of IFRS being available for application. A fellow Board member disagreed as he would want the amendment to IAS 19 (Discount rate: regional market issue) to be available for early application independently of the other amendments as this was a burning issue. One Board member commented that there were numerous combinations of IFRSs as it was and that he did therefore not see an enormous benefit from requiring application as a package. Regardless of the discussion, the Board agreed with the effective date.

The project manager continued by asking whether any Board member had the intention to dissent from the amendments. Nobody indicated dissent.

The project manager then asked the Board whether they were satisfied that the due process had been complied with. The Board agreed.

She asked whether staff could proceed with the drafting and the balloting of the final amendments. The Board agreed.

Proposal to stop the Annual Improvements to IFRSs 2013-2015 cycle and to initiate the Annual Improvements to IFRSs 2014-2016 cycle

The project manager asked the Board whether they agreed with discontinuing the 2013-2015 AIP cycle on the grounds that this cycle only included one amendment to IFRS 1 which proposed the deletion of some short-term exemptions. She also asked whether the staff could initiate the next cycle which would be 2014-2016. This cycle would include the IFRS 1 amendment.

One Board member asked whether there were any other items for the 2014-2016 cycle. The Director of Implementation Activities replied that the Interpretations Committee would recommend another annual improvement to the Board regarding IAS 19 (“Remeasurement at a plan amendment or curtailment”). One Board member asked whether the IFRS 1 amendment had any market impact. The Director of Implementation Activities negated that, saying that it would only be a housekeeping item to delete outdated guidance. One Board member said that it could be further delayed if the 2014-2016 cycle did not have many improvements either. A fellow Board member replied that the aforementioned IAS 19 amendment was very important and would therefore be issued in any case under the 2014-2016 cycle, even if it was the only amendment other than IFRS 1.

The Board agreed with the staff’s recommendation.

Accounting for a structure that appears to lack the physical characteristics for a building

The project manager started explaining that the Interpretations Committee had received a request to clarify whether telecommunication towers should be accounted for as property, plant and equipment in accordance with IAS 16 or as investment property in accordance with IAS 40. The Interpretations Committee had expressed general support for broadening the scope of IAS 40 to also include a structure such as a telecommunication tower and to do so by focussing on the way in which the asset was used rather than focusing on the physical characteristics of the structure on whether it was fixed to land. The project manager said that there would be three alternatives for dealing with the issue:

1. The IASB could take the issue onto its agenda.
2. The IC could do further work on behalf of the IASB.
3. The IASB could consider the issue within the context of the agenda consultation in 2015.

The staff recommended Alternative (c) and asked the Board whether it agreed with the recommendation.

One Board member asked what the accounting was in practice. The Director of Implementation Activities replied that the issue was brought to the Interpretations Committee as there was diversity in practice. However, the Interpretations Committee had concluded that the standard was clear that those structures were not a building and therefore could not be accounted for as investment property. One Board member said that he thought the problem was overstated in the paper. He would not be concerned about unintended consequences of including these structures because fair value measurement was only an option in IAS 40. He said that the interpretation of the standard by the IC was correct and said it was not an agenda consultation decision as it was too small an issue. He therefore suggested taking it onto the IASB agenda as it was a very limited project.

Another Board member suggested researching first. He said the country where the request was from was a G20 country and that they had already indicated that they were unhappy with IFRSs. He expressed concerns about scoping as there were many types of constructions. He said with the IAS 41 amendment the Board had received a lot of feedback on scoping which should be avoided in this case. One Board member agreed with going ahead and said that there was not only one G20 country that had this problem but many countries in Latin America experienced problems as well.

One Board member disagreed with taking the issue onto the agenda as the agenda was full enough as it was. A fellow Board member disagreed with that saying that it would not require very much staff time as it was only a limited scope issue. He conceded that should the IASB wish for the answer to be more conceptual, it might be a bigger project.

The Chairman said that he understood both sides and suggested asking staff to explore whether there were enough resources to go ahead with the project. The Senior Director for Technical Activities said that scoping was the biggest issue here. The Chairman suggested finding reasonable conceptual principles for the scope. One Board member said that waiting for the agenda consultation might mean four to five years until the problem was addressed. The Chairman concluded that staff should perform further work in this area before a decision could be made.