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IASB Meeting — 19–21 June 2018

Start date:

End date:

Location: London

IASB (International Accounting Standards Board)

 

Summary

On Tuesday 19 June the IASB and the US FASB held a joint education meeting. That was followed by a two-day meeting of the IASB on 20 and 21 June.

Joint IASB–FASB Education Meeting

The topics being discussed were mainly those related to Standards that the IASB and FASB developed together, or are largely converged, as well as new topics that both boards have on their work programmes.

Segment Reporting

The IASB’s and FASB’s Standards on segment reporting (IFRS 8 Segment Reporting and Accounting Standards Codification Topic 280, Segment Reporting) are largely converged. The IASB provided a summary of its post-implementation review of IFRS 8 and explained why it decided not to finalise the amendments to IFRS 8 it had exposed. The FASB outlined the targeted changes related to the segment aggregation process that it is considering making to Topic 280.

Primary Financial Statements and Financial Performance Reporting

Both boards are working on projects related to the primary financial statements. The IASB gave an overview of its Primary Financial Statements project and the FASB updated IASB members on the background and scope of its Financial Performance Reporting. The FASB is focusing on two types of improvements: disaggregation of performance information; and the structure of the performance statement (subtotals).

Disclosure Initiative and the Disclosure Framework

Both boards are working on projects related to improving disclosures in the financial statements. The IASB provided an update on its Disclosure Initiative—in particular the Principles of Disclosure and Targeted Standards-level Review of Disclosures projects. The FASB gave an update on its Disclosure Framework project.

Fair Value

The IASB’s and FASB’s Standards on measuring fair value (IFRS 13 Fair Value Measurement and Accounting Standards Codification Topic 820, Fair Value Measurement) are largely converged.

The FASB has developed amendments to the disclosure requirements for fair value measurements which it plans to finalise, by updating Topic 820, in the third quarter of 2018. The FASB provided an overview of those changes. The IASB set out the role of post-implementation reviews and provide some background on IFRS 13, including differences between Topic 820 and IFRS 13. The staff summarised the main messages received and how the IASB plans to consider the usefulness of disclosures as part of its work on ‘Better Communication in Financial Reporting’.

Goodwill and Impairment

The IASB and FASB requirements for business combinations were developed jointly. The requirements for the initial recognition and measurement of goodwill are therefore largely converged. The IASB and FASB requirements for the allocation of goodwill to cash-generating units and impairment are similar, but there are differences. Both boards have projects looking at goodwill. The boards shared information about those projects.

Implementation

The boards shared information about their respective implementation support activities undertaken regarding revenue recognition and leases.

Update on all projects not otherwise covered

The boards provided updates on their projects that will not otherwise be discussed during the Joint Education Session.

IASB Meeting

Disclosure Initiative

This session has three threads: Better Communication in Financial Reporting; Targeted Standards-level Review of Disclosures—Guidance for the Board; and Materiality.

The staff provided the background to, and current status of, the projects in Better Communication in Financial Reporting (Primary Financial Statements, Principles of Disclosure, Targeted Standards-level Review of Disclosures, Definition of Material, Management Commentary and IFRS Taxonomy). IASB members indicated that they were satisfied with the current interaction and distinction between them.

The staff presented an analysis and recommendations to the Board about the development of ‘Guidance for the Board’ to use when developing and drafting disclosure objectives and requirements. The IASB decided to assign a member of the IFRS Taxonomy team to each of the Board’s active projects in an advisory capacity when developing disclosure objectives and requirements. The IASB also supported using a five-step approach to develop disclosure objectives and requirements. The Board will select the Standards to review at its July 2018 meeting.

The IASB continued to consider the feedback on its proposed amendments to the definition of material, supporting all of the staff recommendations in relation to the effective date, ‘immaterial’ vs. ‘not material’, the materiality practice statement, use of the term ‘material’ and the definition of material of the International Auditing and Assurance Standards Board (IAASB).

Dynamic Risk Management (DRM)

The IASB decided that it will address as part of the first phase of DRM project the derivative financial instruments that may be used as the hedging instruments for DRM and their designation and de-designation. The IASB also supported the staff analysis of what performance means in the context of DRM and the information about DRM activities that should be provided in the statement of profit or loss.   

Research programme

The staff gave a general update on the research programme.

IBOR reform

The IASB decided to start a research project to consider the effects on financial reporting of potential discontinuation of IBORs (interest reference rates such as LIBOR, EURIBOR and TIBOR).

Primary Financial Statements

In developing the proposals for primary financial statements the staff have been focusing on non-financial entities. At this meeting the staff presented its preliminary analysis and observations about whether the tentative decisions made so far could apply, with little or no change, to financial entities. The IASB did not make any decisions.  

Insurance Contracts

The IASB decided to propose, as part of its annual improvements cycle, a series of amendments to IFRS 17 Insurance Contracts. This is to address problems where the drafting of IFRS 17 does not achieve what the Board intended.

Implementation

The staff had recommended that the IASB not finalise the amendments it proposed and exposed to IFRIC 14 IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. However, the Board voted in favour of the staff performing further work. The issue will be brought back at a future meeting.

Islamic Finance Consultative Group Update

The staff provided a summary of the March 2018 meeting of the Islamic Finance Consultative Group.

Business Combinations under Common Control 

The Board asked the staff to drop the Full Fair Value approach but continue to work on the Ceiling and Revised Ceiling approaches. IFRS 3 should be used as a basis and the staff should explore different overlays to providing the most useful information about BCUCC that affect NCI.

 

Agenda for the meeting

Tuesday 19 June 2018 (IASB-FASB joint session)
  • Segments
  • Primary financial statements
  • Disclosure framework and disclosure initiative
  • Fair value PIR and FASB FV disclosure project
  • Goodwill and impairment
  • Implementation:
    • Revenue
    • Leases
  • Update on all projects not covered

Wednesday 20 June 2018 (IASB only)

  • Disclosure initiative — disclosure objectives:
    • Principles of disclosure
    • Targeted standards-level review of disclosures
    • Definition of material
  • Dynamic risk management:
    • Summary of discussions to date
    • Derivatives used for DRM purposes
    • Financial performance
  • Research programme: update
  • IBOR reform: research project proposal

 

Thursday 21 June 2018 (IASB only)

  • Primary financial statements:
    • Preliminary analysis on applying project proposals to financial entities
    • Preliminary findings on current reporting practice
    • Financial performance reporting
  • Insurance contracts:
    • Annual improvements
    • Annual improvements on coverage units
  • Implementation
  • Islamic finance consultative group update
  • Business combinations under common control:
    • Way forward for transactions affecting NCI

Agenda papers for this meeting are available on the IASB's website:

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