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Research project — IFRS 2 approach

Date recorded:

This session was devoted to discussing the approach the IASB staff plan to apply to the research project to identify the main application issues that arise from IFRS 2 in practice, and the most commonly identified areas of complexity. The IASB staff member introduced the agenda paper and asked the IASB members whether they agreed with the suggested approach to the exploratory research on IFRS 2, or whether any changes were needed.

One IASB member expressed concern that if the IASB responded to some of the issues identified, it could result in some fundamental concepts in IFRS 2 being reconsidered; and reminded the IASB members of the comment the IASB Chairman had made with respect to Post-Implementation Reviews (PIRs) and the appropriateness of fundamental reviews of Standards that were quite new. She highlighted the issue of expectations management and the importance of the IASB sending a clear message about what its intention was in looking at IFRS 2, and also cautioned about how these issues interacted with other projects, noting that, unlike IAS 32, the concepts of debt and equity in IFRS 2 were aligned with the existing Conceptual Framework. She further questioned whether some of the complexities were arising simply because of the complicated arrangements that were being accounted for under IFRS 2.

The Senior Director, Technical Activities noted that consideration of how the issues interacted with other projects was one reason why the staff believed that a PIR was not the most appropriate course of action as issues would be considered in isolation. At this stage the staff were working on documenting the practical issues that were being encountered, and were working in conjunction with other projects, which was not in accordance with this as a PIR. He further highlighted the basic premise expressed in the agenda paper that the existing requirements should be retained as much as possible.

Another IASB member noted that she found the agenda paper helpful. She did not share the same concerns as those expressed by the previous IASB member, but reiterated the comment with respect to the importance of expectations management and explaining to people why the IASB was looking at this. She highlighted that complexity was always going to be a product of having two measurement models in one Standard. She believed if the IASB really wanted to address complexity, it would have to reconsider having two models, but acknowledged that the objective of this research was to look at implementation issues, and accordingly, she believed that the planned research was right scale of work, rather than doing a full PIR including Public Requests for Information. She further noted that the Research Paper (the output of the exploratory research) would be a helpful contribution to the upcoming Agenda Consultation.

There were no further comments.

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