IFRS implementation issues

Date recorded:

Agenda Paper 12A: Narrow-scope amendments to IAS 19 Employee Benefits and IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction: Summary of due process followed

The Visiting Fellow reminded the Board that at the previous meeting, it had tentatively decided to publish an Exposure Draft (ED) which proposed narrow-scope amendments to IAS 19 and IFRIC 14. Those amendments regarded two projects. One was the availability of a refund of a surplus from a defined benefit plan when an independent trustee had unilateral powers whilst the other one was about remeasurement of a plan amendment, curtailment or settlement. The staff concluded that all due process steps had or would still be taken.

She asked whether any of the Board members intended to dissent from the proposed amendment. None of the Board members indicated that they wanted to dissent. On the question of whether all Board members were satisfied with the due process, all members agreed. She then asked whether all agreed with the comment period being no less than 120 days. Everyone agreed.

The Chairman asked whether staff were given the permission to ballot. None of the Board members objected.

Agenda Paper 12B: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Proposed Amendments to IFRS 10 and IAS 28 (2015)): Summary of due process

The Senior Technical Manager introduced the agenda paper that proposed to combine two projects in one ED. One was with regard to the presentation and recognition of eliminated gains or losses on transactions with associates and joint ventures. This project had already led to a balloted ED in November 2014 but had subsequently not been finalised. The other project aimed to remove a conflict between the IFRS 10 and IAS 28 amendment that was issued in September 2014 and IAS 28 with respect to measurement on initial recognition of the retained equity-accounted investment.

The Senior Technical Manager said that the new ED would be balloted with a more unique title to make it distinct from the September 2014 amendments. She said that the November 2014 ED had one dissent which would be carried forward to the new ED. She asked if there were any additional intentions to dissent.

One Board member said that she had dissented from the September 2014 amendments and did therefore not plan to dissent from the new ED although she still did not agree with the original amendment. The Senior Director for Technical Activities replied that the dissents would be retained in the September 2014 amendments.

The Board member who dissented from the November 2014 ED asked whether it would be clear that he only dissented from the part of the ED that had originally been the November 2014 ED. The Senior Technical Manager confirmed that. The Board member asked whether constituents would be given the possibility to agree with one part of the ED and disagree with the other. The Senior Technical Manager confirmed that there would be several questions on either part.

None of the other Board members indicated dissent from the ED.

The Senior Technical Manager asked whether the Board agreed with prospective application with early application permitted. All agreed.

She then asked whether they agreed that there was no special additional relief for first-time adoption. She also asked whether the Board was satisfied with the due process and whether they had permission to ballot. All agreed to all questions.

Agenda Paper 12C: IFRIC Update

The Senior Director for Technical Activities informed the Board that the IFRS 11 issues around Joint Operations would return at the next Interpretations Committee meeting.

One Board member said that he disagreed with the direction of the Interpretations Committee on the IAS 21 issue. He summarised that the Committee had decided that an Interpretation should be published. The Interpretation should state that if cash was received in advance in a foreign currency, it would be translated on the day of receipt or its due date (whichever was earlier). Revenue would subsequently be recognised at that amount. The Board member asked what would happen if the entity billed in advance but received the cash later. He said that under the Committee’s proposal, the contract liability would not be subsequently translated, however the contract asset (i.e. the receivable) would be translated at every reporting date. In his view, that was a mismatch as nothing would have happened that allowed for an exchange gain or loss. He suggested that this should be considered in the proposal. One Board member replied that this would be a question of scope.

One Board member asked whether the issue was with the Interpretation or really with IAS 21. Several Board members agreed that this was an issue in IAS 21. The Board member who raised the issue replied that it should be reconsidered whether the contract liability was a non-monetary item.

One Board member advised that the IFRS 15 Transition Resource Group was made aware of this issue.

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