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Location: Virtual meeting
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The IASB meet via video conference on 26 January 2021. The full agenda, overview, and our meeting summaries are available in the left navigation panel as well as below. Agenda papers for this meeting are available on the IASB's website. |
Agenda for the January 2021 meeting.
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Tuesday 26 January 2021 (09:00-13:15)
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Agenda papers for this meeting are available on the IASB's website.
Overview of the IASB's January 2021 meeting.
The IASB met on Tuesday 26 January 2021 by video conference.
Board Work Plan: This was a regular update of the work plan. Within the next six months the IASB expects to finalise amendments related to three projects and publish consultation documents for six projects.
Amendments to be finalised:
Consultation documents to be published:
The Board will not start any remaining research pipeline projects or the PIR of IFRS 5. Rather, as decided at the Board’s October 2020 meeting, the Board will obtain updated information about those projects as part of the 2020 Agenda Consultation to help reassess their relative priority.
The Board will hold an extraordinary meeting early in February to determine whether a project needs to be added to update the condition in the amendment to IFRS 16 with regard to COVID-19-related rent concessions that any reduction in lease payments affects only payments originally due on or before 30 June 2021.
Maintenance and Consistent Application: The staff presented the December 2020 IFRIC Update.
Disclosure Initiative—Subsidiaries that are SMEs: The IASB is developing a Standard setting out reduced disclosure requirements for subsidiaries that apply IFRS Standards but meet the definition of an SME. At this meeting, the Board discussed disclosures about cash-generating units containing goodwill and intangible assets with indefinite useful lives and the scope of the proposed Standard. The Board decided that it apply to entities that, at any point during their reporting period, are subsidiaries of a parent presenting consolidated financial statements applying IFRS Standards and that the scope should not be limited to single entity financial statements. They also decided that the consultation document should be an ED.
Primary Financial Statements: In December 2019, the IASB published Exposure Draft ED/2019/7 General Presentation and Disclosures. At the December 2020 meeting, the Board began discussing summarised feedback from the 215 comment letters it received, outreach activities, fieldwork and a review of academic literature. The Board did not discuss four of the 11 papers and at this meeting continued its discussions. The staff also presented a redeliberation plan.
In this session, the Board discussed updates to the work plan.
The paper provided an update on the Board’s work plan since its last update in October 2020. In the meantime, the Board has started its work on the post-implementation review (PIR) of the classification and measurement requirements of IFRS 9 and has moved the Financial Instruments with Characteristics of Equity project to the standard-setting programme.
The Board will be asked at a future meeting to add a narrow-scope project on disclosure requirements in relation to supply chain financing arrangements.
The Board expects the following final amendments for the following projects in the next six months:
The following documents are expected to be published for consultation within the next six months:
The Board will not start any remaining research pipeline projects or the PIR of IFRS 5. Rather, as decided at the Board’s October 2020 meeting, the Board will obtain updated information about those projects as part of the 2020 Agenda Consultation to help reassess their relative priority.
No decisions are asked of the Board in this session.
The staff noted that the timetables given in the Board are subject to change because of the ongoing COVID situation. They also heard from constituents that given the prolonged nature of the pandemic, rent concessions are being granted for longer periods than initially expected by the Board when it finalised the amendment to IFRS 16 with regard to COVID-related rent concessions. The Board will hold an extraordinary meeting early in February to determine whether a project needs to be added to update the condition in the amendment that any reduction in lease payments affects only payments originally due on or before 30 June 2021.
No comments were made by Board members and no decision was taken.
In this session, the Board commented on the December 2020 IFRIC update.
The Board was invited to provide comments or ask questions on the December 2020 IFRIC Update.
No comments were made by Board members and no decision was taken.
In this session, the Board discussed matters arising from the staff’s analysis of adaptations to the reduced disclosure requirements and Board members’ review.
The objective of the project is to develop an IFRS Standard (reduced disclosure IFRS Standard) that will permit subsidiaries that are small and medium-sized entities (SMEs) to apply IFRS Standards but with reduced disclosure requirements.
At this meeting, the Board discussed further matters arising from the staff’s analysis of adaptations to the reduced disclosure requirements and the Board members' review under the following papers:
This paper asked the Board whether and, if so, which disclosure requirements should be proposed in a possible reduced-disclosure IFRS Standard for cash‑generating units containing goodwill or intangible assets with indefinite useful lives.
The staff recommended that some of the disclosure requirements in IAS 36:134-135 be included in the proposed reduced-disclosure IFRS Standard. This is because of the differences in how goodwill or intangible assets are accounted for when applying IFRS Standards and the IFRS for SMEs Standard.
Board members supported the staff recommendation specifically on the measurement differences. The disclosures will provide a more meaningful and relevant information to the users of the financial statements.
All members of the Board voted in favour of all of the staff’s recommendation in the paper.
Scope of the reduced-disclosure IFRS Standard (Agenda Paper 31B)
This paper examined the scope of the proposed reduced disclosure IFRS Standard and whether the scope should remain subsidiaries that are SMEs or should be expanded to a wider group of entities and, if so, which entities.
Discussion and voting
The staff recommended that the scope of the proposed reduced-disclosure IFRS Standard should be restricted to subsidiaries that are SMEs and that the Board consults on widening the scope of the proposed Standard.
The argument in favour of extending the scope was to reduce the costs for subsidiaries with parents presenting consolidated financial statements. Permitting the reduced-disclosure IFRS Standards to be applied by all SMEs will address this concern.
Some members of the Board have expressed their concern on widening the scope. Permitting all SMEs to apply the reduced-disclosure IFRS Standard might result in some lenders requiring that the reduced-disclosure IFRS Standard be applied by an SME because it is perceived to be better than the IFRS for SMEs Standard.
When asked to vote, 11 out of 13 Board members voted in favour of the staff’s recommendation in the paper.
Board members have asked the staff to clarify whether they have considered the parent of subsidiaries who are reporting under accounting standards that are considered equivalent to IFRS Standards in some jurisdictions (e.g. US GAAP). Particularly, Board members asked whether their subsidiaries will be in scope as the paper specifically highlighted only those parents of subsidiaries presenting consolidated financial statements applying IFRS Standards. The staff clarified that for this particular instance, provisions under IFRS 10 will apply regarding the concept of equivalence and will be addressed on a jurisdiction-by-jurisdiction basis.
Board members discussed that potential users should make their individual assessment whether or not they meet the requirements or if they are in scope in order to apply the proposed reduced-disclosure IFRS Standard at the first time adoption. This is to ensure that there is consistency in the application of reporting. Board members also suggested that the application should be as of the reporting date and not at any point in time during the reporting period.
The staff accepted the Board’s suggestion in relation to the application to be as of the reporting period and revised their recommendation. When asked to vote, 11 out of 13 Board members voted in favour of the staff’s recommendation in the paper.
This paper discussed and asked the Board whether to publish a Discussion Paper (DP) or an Exposure Draft (ED) for the project.
Discussion and voting
The staff recommended that the consultation document should be an ED. The main reason for this is that the staff think that the suggested disclosure requirements are best illustrated in an ED to enable stakeholders to assess the proposed disclosure requirements.
When asked to vote, 12 out of 13 Board members voted in favour of the staff’s recommendation in the paper.
In this session, the Board redeliberated the primary financial statements project proposals.
Background
This paper set out the plan for redeliberating the Primary Financial Statements (PFS) project proposals.
Staff analysis
The staff considered the factors in approaching redeliberations, general approaches to redeliberations, approaches to redeliberation by project topics and project timing. The staff considered four main factors in deciding how to approach the redeliberations; these being the project objectives and its focus, the linkages between project topics, timeliness and efficiency. The staff considered which project topics required a staged approach to redeliberations, which topics should be prioritised in redeliberations and which topics could be removed or added to the scope of the project when considering the general approach to redeliberations. The staff set out the proposed approach for redeliberation on the categories in the statement of profit or loss, management performance measures (MPMs), disaggregation and other topics. Lastly, the staff will develop estimated timelines once the Board has completed initial discussions on these topics.
Board discussion
Board members were supportive of the paper as it provides the readers with an indication of the direction of travel. Board members asked the staff to provide more analysis on the benefit of presenting more consistent subtotals and also how the Board can support the practitioners in presenting the new subtotals initially. Some Board members highlighted that the staff should identify the projects which have a degree of interdependency at the outset in order to prioritise the project topics more efficiently. A Board member questioned where and when the staff would be addressing the definition of “main business activities” and whether this would be before or after the discussion of classification of investing or financing activities. The staff have considered deliberating these topics together but agreed to have a separate discussion on the definition of “main business activities” and the classification of investing or financing activities as these are complex issues. Another Board member questioned whether MPMs are substitutes or compliments for subtotals in the proposed Standard as previous Board discussions have concluded that MPMs are compliments to the subtotals and this should be clarified in the paper.
No decisions were made.
Background
This paper analysed feedback from comment letters and outreach on the proposals relating to the statement of cash flows set out in the Exposure Draft ED/2019/7 General Presentation and Disclosures.
Staff analysis
Many respondents did not respond to the proposals but of those respondents that did, many agreed with the proposals. The main concern of those that did not agree was lack of alignment between the statement of cash flows and the statement of profit or loss, which was also raised as a concern by some fieldwork participants. Some respondents requested a comprehensive review of IAS 7.
Board discussion
Board members expressed concerns that the paper focused on full alignment between the statement of cash flows and the statement of profit or loss when this topic was deliberated in previous PFS projects to no avail. In addition, Board members suggested that the staff segregate the scope of this project with work to be performed on future projects (i.e. the review on the statement of cash flows) and proposed not to reopen a fundamental debate on achieving alignment between the statements based on the comments received. A Board member asked whether the staff could explore the possibility of presenting, in the investing section, in the statement of cash flows to require disaggregation between investing activities which relate to operations and investing activities which relate to other activities. Lastly, Board members asked whether the staff could perform further cost benefit analysis for banks as some users have expressed concerns on incurring additional costs.
No decisions were made.
Background
This paper analysed feedback from comment letters and outreach on the proposals not specifically discussed in questions set out in the ED.
Staff analysis
Most of the comments not responding to the specific question identified additional work respondents would like the Board to undertake, mostly as separate projects. Respondents also provided feedback on proposals relating to other comprehensive income and interim financial reporting as well as comments on the proposed implementation period.
Board discussion
Board members stated that, with the exception of equity accounting, the work has been captured on the other topics through the agenda consultation and consulting with stakeholders. A Board member expressed concern that the proposal may require a systems change and that the fieldwork may be a good indicator of what is the reasonable time for implementation. Board members asked the staff to clarify the consequences arising from the introduction of PFS and how this interacts with the existing requirements in IAS 34. Lastly, Board members cautioned the staff about creating exceptions from the new Standard for non-publicly accountable entities and investment funds.
No decisions were made.
Background
This paper analysed feedback from user comment letters and user outreach meetings on the proposals set out in the ED.
Staff analysis
All users expressed strong general support for the project. Most users expressed their appreciation to the Board for undertaking this project, for example saying that they expect the proposals will significantly enhance the value of financial statements for investors.
Users particularly welcomed the proposals on the structure of the statement of profit or loss, in particular a defined operating subtotal, and on management performance measures because of the enhanced comparability and transparency of financial information they would provide.
Many users asked for the Board to extend the scope of the proposals, in particular in relation to management performance measures, the statement of cash flows, segment reporting and interim reporting.
Board discussion
Board members supported the proposal but asked for feedback on whether there was consensus from users on the definition of unusual items and whether the staff could collate all comments on digital accounting (e.g. database, taxonomy and iXBRL) in order to assess how digital accounting may be affected by this proposal. The staff said there was diversity in views from the users on the definition of unusual. There is a group of users that would prefer to have more items being included as unusual items including the ability to be able to choose what is defined as unusual. Another group of users support setting a higher threshold for the definition of unusual items. The staff also confirmed that early modelling of the proposal is being explored. Board members asked the staff to consider the relationship between MPMs and definition of unusual items.
No decisions were made.
Background
This literature review summarised the evidence from academic papers on topics relevant to the questions in the ED resulting from the PFS project.
Board discussion
A Board member expressed concerns that the studies of European entities reporting expenses predominantly by nature may not be aligned with their expectations. Board members expected to see more European entities applying a mixture of reporting expenses by function and by nature. The staff clarified that the literature focuses on European reporting and would therefore likely differ from samples from other jurisdictions (e.g. Japan). Board members highlighted that the literature only considered income and expenses from operating and financing activities and did not consider investment income and expenses. In addition, the literature stated that the investors distinguish integral associates and joint ventures from non-integral associates and joint ventures based on expected synergies. Board members questioned what criteria should be used for the expected level of synergies and whether these criteria align to the proposal in the ED. The staff clarified that investment income is not included in this analysis due to lack of literature around categorising investment income and expenses. Furthermore, the studies included in the paper do not look at the income statement in its entirety and the studies mainly looked at distinguishing income and expense between operating and financing categories conceptually and not empirically. The staff further clarified the studies on the expected synergies from integral associates and joint ventures and non-integral associates and joint ventures do not correspond to the criteria as proposed in the ED.
No decisions were made.
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