Extractive activities

Date recorded:

Extractive Activities — Feedback Summary — Agenda Paper 19


As a result of the 2015 Agenda Consultation the research project was added to the research pipeline (see May 2016 IASB Meeting—Agenda Paper 24D).

During 2018, the Board commenced work on the research project. The Board is currently reviewing feedback from the 2010 Discussion Paper Extractive Activities (DP) and gathering additional evidence to help it decide whether to develop proposals to replace or amend IFRS 6 Exploration for and Evaluation of Mineral Resources.

Staff analysis

The Board commenced its research project on extractive activities by asking the national standard-setters, whose staff contributed to the DP, to inform the Board of any significant developments in extractive activities since the publication of the DP.

The following key areas were identified as areas of the extractives industry that have changed since the DP was issued in 2010:

  • (a) The risk profile of the entities, and the industry in which they operate, has changed
  • (b) New, and more complex, transactions for which the recognition, measurement and disclosure requirements of existing accounting Standards, in their view, are not clear
  • (c) Each jurisdiction currently applies their own reserves and resources classification system and these systems have undergone minor amendments since 2010
  • (d) Some jurisdictions have implemented their own reporting requirements for information outside the IFRS Standards such as payments to governments and sustainability reporting

Further detailed comments from national standard-setters in each of these areas are provided in the agenda paper.

Based on the analysis, staff propose further research into the effects of the following topics on the DP and project proposals:

  • (a) 2018 Conceptual Framework for Financial Reporting
  • (b) New Standards and amendments, including other Board publications
  • (c) Changes to reserves and resources classifications and definitions
  • (d) Changes to transparency and sustainability reporting, for example, payments to governments

Staff recommendations

No staff recommendations were included in the paper as the Board is not being asked to make any decisions at this meeting.

Board Discussion

The discussion centered on the proposed scope and focus of the extractive activities project.

Some Board members raised concerns relating to the feedback presented, which showed that respondents were generally satisfied with IFRS 6 and the way the Standard was working. It was noted that IFRS 6 allows a diverse range of policy choices so preparers are satisfied as they can account for expenditure in the way they determine to be best. Additionally, users largely focus on the cash flow statement and reserves and, as such, may not be impacted by the implications of the Standard on the balance sheet. However, IFRS 6 was intended to be a temporary Standard to address an industry-specific issue in the short term. As such, it was proposed that the objective of the project should be to replace or remove IFRS 6 with a permanent solution.

It was also noted by the Board that a lot of the feedback is around accounting issues that the extractive industry faces as more complex arrangements are being entered into. The project should determine whether these are industry-specific issues or simply difficulties with applying other standards to ever more complex arrangements. This would help to identify whether an industry standard is needed or whether the issues are more interpretive in nature.

In terms of disclosures, several Board members agreed that there should be further consideration of how the IFRS requirements interact with national requirements.

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