Post-implementation Review of IFRS 10, IFRS 11 and IFRS 12

Date recorded:

Responding to the feedback (Agenda Paper 7)


In December 2020, the Board published a Request for Information (RFI) as part of its Post-Implementation Review (PIR) of IFRS 10-12 which was open for comment until May 2021. The feedback received from this process was discussed by the Board in July 2021 and the feedback summaries have been reproduced as Agenda Papers 7A and 7B which accompany this paper.

The purpose of this session was for the Board to conclude which, if any, topics it could consider further. Note that this paper was the second of two papers considering such topics, with the first being discussed by the Board in October 2021. Within this session, the Board was also asked to approve whether sufficient work has been completed to conclude the PIR and for the staff to prepare the “Report and the Feedback Statement”.

It is noted that the Board is undertaking its Third Agenda Consultation to determine how to prioritise its activities and what new projects to add to its work plan for 2022-2026. As such, any further action arising from this PIR will be considered together with the outcome of the Third Agenda Consultation.

Staff recommendations

The staff identified the following areas for the Board to consider for further action while developing its work plan for 2022–2026:

  • Medium priority—a project to assist the application of IFRS 10 and IFRS 11 which considers:
    • The relationship between substantive rights and protective rights
    • A change in relevant activities during the life-cycle of an investee
    • Assessing non-contractual agency relationships
    • Accounting for disproportionate share of output compared to share of ownership
  • Low priority—a project on the disclosure of interest in other entities

The staff assigned the above priority ratings based on the feedback from the RFI, the outreach activities and additional research conducted.

Board discussion

A number of Board members reiterated the view discussed in the October 2021 meeting that overall IFRS 10-12 are working as intended and that in many cases, the questions raised actually relate to implementation issues rather than the design of the Standards. One Board member commented that none of the topics highlighted in this paper stood out as an issue that needs to be addressed. Another Board member expressed that care must be taken when reviewing PIR comment letters as respondents will often ask for guidance in areas where significant judgement is required, however the Standards are designed to be principles-based and therefore preparers are expected to have to make difficult judgements. The items identified for consideration were discussed as follows:  

  • The relationship between substantive rights and protective rights—One Board member expressed surprise that this was raised as an area of concern by stakeholders as in the Board member’s view, the Standard contains very clear guidance in relation to substantive and protective rights and how to deal with practical issues that could be encountered. Another Board member added that substantive rights and protective rights are quite distinct however there still seems to be some confusion in this area. Therefore, either the wording needs to be clarified or educational material is needed in this area, which should not be too difficult to achieve.
  • A change in relevant activities during the life-cycle of an investee—A number of Board members agreed that this topic was more complex than the first. One Board member added that this might require the Board to reconsider the concept of control and what entities need to assess, and in particular, whether the assessment should be forward-looking or whether the conditions at a point in time should be assessed.
  • Assessing non-contractual agency relationships—One Board member expressed concern that stakeholders would like to be able to find a definitive answer in the Standard which addresses their specific fact pattern. However, in reality, this is a very judgemental area with many variables and therefore it is questionable how much assistance can realistically be provided here. Another Board member supported this view and also questioned whether this was really a pervasive topic, adding that in the feedback received, many respondents noted that they did not need to assess this question frequently.
  • Accounting for disproportionate share of output compared to share of ownership—One Board member highlighted that this topic was covered in a 2015 Interpretations Committee agenda decision which set out that the first step in approaching these questions is to determine the reasons why the output differs. A number of Board members raised concerns that the reasons entities take different ownership could differ considerably from one case to the next. Therefore, this question would be very difficult to approach without addressing each different potential scenario, which clearly would not be possible. One Board member suggested that this item be removed from the list of medium priority topics.
  • The disclosure of interest in other entities—One Board member agreed with this item being classified as low priority whilst another stated that they would include this within the list of topics to not be considered further.

The Chairman summarised the discussion on the above topics, noting that there appeared to be limited support for taking some of these items forward. He reiterated that the purpose of this meeting was not to decide on whether to embark on these projects but to decide on whether they should be included in the considerations for the Third Agenda Consultation, and as such, he proposed that these items be carried forward.

One Board member commented that in their view it would be better to remove any items that they did not think would warrant further review at this stage so as not to create the expectation amongst stakeholders that these will be addressed. Some Board members expressed reluctance to remove any items at this stage given this is the second of two papers making up a body of work which should be considered in the context of the PIR as a whole to make final recommendations for taking issues forward. 

Several Board members noted that there was a wider strategic decision to be made by the Board in relation to PIRs considering how they should be dealt with and how they should interact with other projects such as agenda consultations.

Given the debate around the topics and the PIR process, it was decided that no vote would take place at this meeting and therefore the Board would not conclude on which topics to be taken forward at this stage or approve the completion of the PIR. Instead, the Board requested that the staff prepare a further two papers to present at a future meeting. The first paper should be a neutral paper setting out the proposed strategy for PIRs including the relationship between PIRs and agenda consultations. Once this has been decided, the staff will be asked to prepare a second paper which addresses all of the topics proposed for further consideration from this PIR (including those raised in the October 2021 meeting) and sets out additional information for the Board such as the potential scale of the projects. 

Analysis of feedback—IFRS 10 (Agenda Paper 7A)

This agenda paper analyses the feedback received in comment letters on the RFI on IFRS 10. It has been reproduced from the July 2021 meeting for the purposes of background information.

There was no discussion on this paper.

Analysis of feedback—IFRS 11, IFRS 12 and other (Agenda Paper 7B)

This agenda paper summarises the feedback received in comment letters on the RFI regarding IFRS 11, IFRS 12 and other matters raised by respondents. It has been reproduced from the July 2021 meeting for the purposes of background information.

There was no discussion on this paper.

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