Third agenda consultation

Date recorded:

Cover paper (Agenda Paper 24)

In March 2021, the IASB published Request for Information (RFI) Third Agenda Consultation. The comment period for the RFI ended on 27 September 2021. At this meeting, the IASB continues its discussions of the feedback received on the RFI.

The purpose of this meeting was to start the discussion on new financial reporting issues to be added to the IASB’s work plan for 2022 to 2026.

The cover paper was not discussed.

Potential projects—Approach to staff analysis (Agenda Paper 24A)


This paper outlined the approach that staff used to analyse those potential projects. It also sets out next steps.

Approach to staff analysis

In December 2021, the IASB tentatively decided to proceed with the criteria proposed in the RFI for deciding whether to add a potential project to its work plan. The IASB also noted that the relative importance of a criterion is likely to vary depending on the circumstances surrounding the potential project. Furthermore, determining the priority of potential projects that could be added to the work plan requires judgement. Hence, the criteria are not a check list but rather factors to consider when making that judgement.

The staff have analysed the potential projects based on the criteria and the feedback from respondents about potential projects. The analysis is intended to help the IASB assess whether a potential project meets the overarching criterion—whether the project would meet users’ information needs, while taking into account the costs of producing the information.

The staff analysis of potential projects is set out in Agenda Papers 24B–24D. Because of the large number of potential projects, the staff divided those projects into three categories for the purpose of presenting the staff analysis:

  • Proposed short-listed potential projects
  • Other potential projects described in Appendix B of the Request for Information
  • Other suggestions for potential projects

Next steps

The proposed shortlist of potential projects is intended to help the IASB narrow down the large number of potential projects to a smaller list of potential projects to be considered further in April. Only those potential projects that the IASB decides to include on the shortlist in March will be discussed further in April. At the April meeting, the staff plan to ask the IASB whether it agrees with a package of staff recommendations, rather than ask the IASB for decisions about each project individually. That package of recommendations will take account of capacity constraints and potential interactions between individual projects.

IASB discussion

IASB members expressed agreement with the proposed approach, with one IASB member asking what would happen to those projects on the short list that are not taken onto the agenda. The staff replied that there could be a potential reserve list and that this would be discussed at the April meeting.

One IASB member said that the expectation for the April meeting should be that not all items on the short list would be taken on. Also, items that are moved from the short list to the active work plan should not be expected to start immediately. The Chair agreed with that and added that in addition to the projects on the active agenda and the potential new projects on the short list, the IASB is also committed to conduct the post-implementation reviews (PIRs) that are due and any new projects that will be conducted jointly with the ISSB.

There was no vote on this paper.

Potential projects—Proposed short-listed projects (Agenda Paper 24B)

The staff recommended that the following potential projects be short-listed for further discussion at the April meeting:

  • Climate-related risks
  • Cryptocurrencies and related transactions
  • Going concern disclosures
  • Intangible assets
  • Operating segments
  • Pollutant pricing mechanisms
  • Statement of cash flows and related matters

The proposed shortlist comprised those potential projects that, in the staff view, best meet the criteria for adding a potential project to the IASB’s work plan. However, the inclusion of potential projects on the proposed short-list does not necessarily mean all of those potential projects would be added to the work plan. The staff plan to develop a package of recommendations for the IASB’s consideration in April, taking into account the overall capacity of the IASB and its stakeholders to make timely progress on additional projects. 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

The staff asked the IASB whether they agree with the recommended shortlist.

IASB discussion

IASB members touched on the different projects on the shortlist and had the following comments:

Statement of cash flows and related matters

Many IASB members stated that the cash flow statement would be their top priority for a project to take forward. Users have been calling for a project on IAS 7 and their reasons for adding a project seem reasonable. Since IAS 7 was developed, there have been many innovations and it is worth revisiting whether IAS 7 still appropriately addresses all of them. IASB members noted that addressing the cash flow statement issue would be a logical project to follow on from the Primary Financial Statements (PFS) project which addresses issues around the income statement. It was also noted that the Interpretations Committee had recently struggled with the definition of cash and cash equivalents and that this is also indicative of the importance of a project on cash flow statements.

Intangible assets

Many IASB members expressed a strong preference for taking on a project on intangibles. Intangibles have been playing a bigger and bigger role in the past few years and IAS 38 struggles to address many of them. One main difficulty will be the scoping, i.e. will the IASB focus on intangible assets or should the scope include intangible items, intangible resources and/or intangible capital. Not limiting the scope to assets would open the door for a collaboration with the ISSB which will likely add a project on intangible resources. One IASB member suggested a staged approach, i.e. address the disclosure issue first and then determine whether recognition and measurement requirements need to be revised. One issue consistently highlighted by users is the inconsistency in recognition of self-generated vs. purchased intangible assets which leads to a high volume of unrecognised intangible items. Another issue is the definition of control of an intangible resource. The IASB would also have to address measurement of intangible assets as well as disclosures around intangibles. However, one IASB member warned that this will likely be a big project which will consume many staff hours and suggested to leverage some of the feedback received as part of the goodwill project.

Climate-related risks

Many IASB members were reluctant to take on a project on climate-related risks, mainly because they see this largely within the remit of the ISSB who will publish an Exposure Draft on climate-related disclosures shortly. Some highlighted though that there are areas within climate-related risks that are the remit of the IASB and therefore it should be considered to develop guidance as to how to apply IFRS Accounting Standards consistently to climate-related risks.

Operating segments

There was also little appetite amongst the IASB members to add a project on operating segments, given that the PIR of IFRS 8 had not revealed any major problems and no project was added as a result of it. The management approach may have flaws but is without an alternative. Two IASB members suggested to consider minimum line items for segment reporting in case the chief operating decision maker does not review significant items. Others thought that once the PFS project is finished, there could be some feedback from the project that could be used to make narrow-scope amendments to IFRS 8.

Going concern disclosures

Most IASB members disagreed with adding a project on going concern disclosures. Generally, issues around going concern were not highly ranked by respondents to the RFI. One IASB member said that it was the responsibility of the auditors to ensure that appropriate disclosures are made. Another IASB member disagreed and said that respondents to the RFI called for guidance on this and the IASB should illustrate how to consistently apply IFRS Accounting Standards to going concern issues. It was mentioned that if the IASB added a project on going concern, it should be ensured that the IASB only considers disclosures. The Chair highlighted that there have been two projects on going concern before and they both did not result in guidance.

Pollutant pricing mechanisms

There was also reluctance among IASB members to add a project on pollutant pricing mechanisms. In IASB members’ views this issue would be difficult to address. The Chair highlighted that an interpretation on emission rights had to be withdrawn and he was unsure what could be done. One IASB member, however, found that this issue should receive a higher priority given that the prevalence of emission rights is increasing. The application of IAS 37 and IAS 38 to those should therefore be explained. Some thought that this could be done as part of a project on climate-related risks if the IASB decides that such a project should be added. One IASB member thought that a project on pollutant pricing mechanisms would be within the remit of the ISSB.

Cryptocurrencies and related transactions

There were mixed views among IASB members as to whether a project on cryptocurrencies should be added. Some saw the benefit of clarifying the accounting as cryptocurrencies become more prevalent rapidly. It was said that the IASB should not wait until it becomes a significant issue for many preparers. Others preferred to wait until more information was available, for example, whether there would be regulation on cryptocurrencies so that it becomes clearer what the rights and obligations are. It was suggested that cryptocurrencies could also be examined as part of an intangibles project. If it should become a project in its own right, it should be carefully scoped, for example the IASB would have to decide whether it would be a disclosures-only project or include recognition and measurement. The Chair said that the IASB should carefully consider any knock-on consequences of such a project, for example on financial instruments accounting. He also noted that the FASB Chair has recently stated that the FASB would not take on a project on cryptocurrencies in the near future.

IASB decision

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.

Potential projects—Other projects described in the Request for Information (Agenda Paper 24C)

Appendix B of the RFI described 22 potential projects, based on outreach conducted when preparing the RFI. Seven of those potential projects have been short-listed (see Agenda Paper 24B above). This paper presented the staff analysis of the other 15 potential projects:

  • Borrowing costs
  • Commodity transactions
  • Discontinued operations and disposal groups
  • Discount rates
  • Employee benefits
  • Expenses—inventory and cost of sales
  • Foreign currencies
  • Government grants
  • Income taxes
  • Inflation
  • Interim financial reporting
  • Negative interest rates
  • Other comprehensive income
  • Separate financial statements
  • Variable and contingent consideration

The staff asked the IASB whether they have any comments or questions on the analysis of the potential projects discussed in the paper and whether the IASB agrees that none of these potential projects should be included on the shortlist for further discussion in April.

IASB discussion

Agenda Papers 24C and 24D were discussed together.

Most IASB members agreed that none of the projects in Agenda Papers 24C and 24D should be added to the short-list. IASB members noted that the reserve list should not only include the projects on the shortlist that do not go on the standard-setting agenda, but also some of the projects from 24C and 24D. It was also noted that some issues pointed out by respondents to the RFI could potentially be addressed by way of an IFRS Interpretations Committee agenda decision. IASB members therefore encouraged constituents to submit the relevant issues to the Committee. One IASB member said that some national standard-setters had done some work on many of the projects listed in the papers (e.g. inflation, employee benefits, foreign currencies, variable and contingent consideration) and that this work could be leveraged.

The following projects from 24C and 24D received comments:

Inflation: It was noted that a project on inflation was important for some regions as it distorts the financial statements in those regions. However, it was conceded that IFRS Accounting Standards provide for hyperinflation and there was no need to address inflation lower than hyperinflation.

Separate financial statements: It was noted that this issue was very jurisdiction specific. The IASB could potentially clarify issues around investment, cost accounting, fair value accounting and equity.

Government grants: IASB members said that government grants had gained much prevalence in the recent past due to the pandemic and therefore it could be considered as a project, especially with regard to transparency. It was also mentioned that there could be some connectivity to potential work from the ISSB.

Other comprehensive income (OCI): The Chair noted that this was still an area of inconsistency and that there is merit in addressing the inconsistency, also to provide the IASB with a better framework for considering OCI when standard-setting. It was noted that when the Conceptual Framework was revised, the IASB did all it could at that time, but there may be more information now.

Application of hedge accounting in IFRS 9: One IASB member noted that this project was suggested for hedge accounting of insurers and dynamic risk management (DRM) for entities other than banks. He said that IFRS 17 contains a risk mitigation approach that achieves similar results to hedge accounting for insurers. For DRM of entities other than banks, he suggested to include this topic in the existing DRM project.

Income taxes: One IASB member said this project could be considered given many narrow-scope amendments to IAS 12 make the standard difficult to apply.

Employee benefits: One IASB member noted that constituents would like to retain the distinction between defined contribution plans and defined benefit plans. As long as this distinction is retained, she did not see what work could be done on employee benefits.

Discontinued operations: One IASB member thought that a project on discontinued operations could have merit. However, it should be clear that this is not a PIR of IFRS 5. The Chair agreed and added that IFRS 5 was issued before PIRs were mandatory for new standards, so there is no requirement.

Discount rates: The Chair noted that a project on discount rates may be worthwhile, given that they follow the simple concept of accounting for the time value of money, however IFRS Accounting Standards have a multitude of approaches to derive the discount rate. This inconsistency could be worth solving.

IASB decision

All IASB members agreed that none of the projects in Agenda Papers 24C and 24D should be added to the shortlist.

Potential projects—Other suggestions (Agenda Paper 24D)

In total, respondents suggested approximately 45 potential projects, which are set out in the appendix to this agenda paper. In all cases, those potential projects were suggested by one or a few respondents. The staff analysed all of those suggestions for potential projects. However, because of the large number of suggestions, this paper did not present an analysis of each suggestion individually. 

Potential projects—Feedback summary for proposed short-listed projects (Agenda Paper 24E)

This paper contained a summary of the feedback from respondents to the RFI about the proposed short-listed projects. As the IASB had already discussed that feedback, this paper was provided for information purposes only, to assist the IASB when considering the staff analysis in Agenda Paper 24B of the proposed short-listed projects.

This paper was not discussed at the IASB meeting.

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