Date recorded:

The IASB mets in London over three days, from Tuesday 22 to Thursday 24 March 2022.   

Business Combinations under Common Control

The IASB published a Discussion Paper in November 2020. In this session, the IASB discussed feedback received on the overall project objective and respondents’ suggestions to expand the scope of the project to address reporting by entities involved in a BCUCC other than the receiving entity, reporting of an investment in a subsidiary received under common control in separate financial statements and reporting of common control transactions other than BCUCCs. The IASB decided that the project objective be updated to reflect the stage of the project and to emphasise that the project considers users of the receiving entity’s financial statements and that the project scope not be extended to address these other topics. The Chair posed an additional question, asking whether they supported expanding the project to consider transfers of interests in associates and joint ventures under common control. Only 2 of the 11 IASB members voted in favour of that proposal.

Management Commentary

In May 2021, the IASB published proposals for a revised Practice Statement (PS) on Management Commentary. The IASB considered a summary of the feedback received. The staff concluded that many respondents, including almost all investors, support the project. Many respondents highlighted the importance of management commentary in corporate reporting and the need for guidance in this area to remain current. Some respondents highlighted that the proposals reflect investors information needs, provide well-structured preparation guidance, could help improve connectivity between ‘financial’ and ‘non-financial’ information, and build on the recent developments in narrative reporting, such as the Integrated Reporting (IR) Framework, and the Recommendations of the Task Force on Climate Related Financial Disclosures (TCFD recommendations). A few respondents disagreed with the focus on investor needs, and instead argued that providing a PS in this area would be outside the remit of the IASB, preferring to use the IIRC's IR Framework as the basis for such reporting. IASB members welcomed the generally positive responses. No decisions were asked from the IASB on the agenda papers.

Extractive Activities

The staff set out a plan for improving the disclosure objectives and requirements about exploration and evaluation expenditure and removing the temporary status of IFRS 6. The staff expect to bring papers back to the IASB in July.

Financial Instruments with Characteristics of Equity

IAS 32 has no general requirements on reclassification between financial liabilities and equity instruments. It is unclear whether IAS 32 requires an entity to reassess the classification of a financial instrument after initial recognition when a contract is modified. The IASB could consider either requiring or prohibiting reassessment (unless IAS 32 specifically requires it). If the IASB decides to prohibit reclassification for changes in the substance of the contractual terms without a modification to the contract, it could consider requiring entities to still disclose information about the effects of such changes on the nature of the obligation. If the IASB decides to require reclassification for changes in the substance of the contractual terms with a modification to the contract, further consideration would be needed in relation to the timing, measurement and disclosure of the reclassification. No decisions were made.

Primary Financial Statements

The IASB considered classification for entities that invest in the course of main business activities in assets that generate a return individually and largely independently of other resources held by the entity. The IASB decided to provide additional guidance. That guidance is set out in the paper. The IASB also confirmed the requirement for an entity to disclose information about MPMs in a single note to the financial statements and not add specific requirements relating to including the MPMs disclosures in the financial statements by reference to another document.

Third Agenda Consultation

The staff estimate that in the period from 2022 to 2026, the IASB will be able to add to its work plan 2 large projects, 3–4 medium-sized projects or 4–5 small projects. They recommended that the IASB short-list seven projects for further discussion: climate-related risks; cryptocurrencies and related transactions; going concern disclosures; intangible assets; operating segments; pollutant pricing mechanisms; and statement of cash flows and related matters. The IASB decided that the vote should only be on whether the seven projects mentioned provide a good basis of the shortlist. All IASB members agreed with that. A vote on individual projects will be held in April.

Maintenance and consistent application

At its February 2022 meeting, the IFRS Interpretations Committee decided to finalise an agenda decision in response to a submission about accounting for the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTRO). No IASB members objected to the agenda decision.

Post-implementation Review (PIR) of IFRS 9

The staff concluded that, overall, the PIR feedback is positive. The staff set out a plan for the second phase of the review. The topics to be discussed are: contractual cash flow characteristics (including financial assets with sustainability-linked features and contractually linked instruments) in April–May; business model assessment in Q2/Q3; equity instruments and OCI in Q2/Q3; modifications to contractual cash flows and amortised cost and the effective interest method in Q2/Q3; and other matters in Q3. The IASB plans to start the PIR of the impairment requirements in the second half of 2022.

Second Comprehensive Review of the IFRS for SMEs Standard

At this meeting the IASB deliberated the approach to develop proposals to update the disclosure requirements in the IFRS for SMEs Standard to align with IFRS Accounting Standards and the alignment of the IFRS for SMEs Standard with the requirements for financial guarantee contracts in IFRS 9. The IASB supported all of the staff recommendations.

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