Date recorded:

The IASB met in London over five days, from Monday 23 to Friday 27 May 2022. The following topics were discussed:

IASB work plan

Since January, the IASB has removed from its work plan ‘Availability of a Refund (amendments to IFRIC 14)’, ‘Post-implementation Review (PIR) of IFRS 10, IFRS 11 and IFRS 12’ and ‘Pension Benefits that Depend on Asset Returns’. New projects the IASB will consider are a high priority project to assess a financial asset’s contractual cash flow characteristics, a narrow-scope project on the interaction of IFRS 10 and IFRS 16 related to the sale of a subsidiary with a leaseback, a project to revise the Due Process Handbook’s objectives for PIRs and research projects on intangible assets and the statement of cash flows and related matters. The IASB expects to finalise in 2022 amendments related to ‘Lease Liability in a Sale and Leaseback’ and ‘Non-current Liabilities with Covenants’. The next consultation document will be an ED from the comprehensive review of the IFRS for SMEs Accounting Standard.

Primary Financial Statements

The IASB decided to confirm the proposed requirements to disclose the income tax effect and the effect on NCI for each item disclosed in the reconciliation between an MPM and the most directly comparable subtotal or total specified by IFRS Accounting Standards, but did not decide on the proposed requirement to disclose how the entity determined the income tax required by the ED. The IASB decided to develop an approach of establishing a broad definition for income and expenses to be included in a single note about limited recurrence and requiring the note that provides information about income and expenses that meet the definition to be divided, so income and expenses with different recurrence characteristics can be identified easily. It also decided to continue to include in the definition income and expenses that are dissimilar to those expected to arise in the future because they are lower in amount and for such items of income and expenses, reconfirm the proposal to require disclosure of the amount recognised in the period and an explanation of why that amount has limited recurrence.

Dynamic Risk Management

In February, the IASB discussed an approach in which the designated derivatives would continue to be recognised at fair value in the statement of financial position with the DRM adjustment recognised in the statement of financial position, as the lower of (in absolute amounts): (i) the cumulative gain or loss on the designated derivatives from the inception of the DRM model and (ii) the cumulative change in the fair value of the risk mitigation intention attributable to repricing also risk from inception of the DRM model. This would be calculated using the benchmark derivatives as a proxy. The difference between the changes in fair value of designated derivatives and DRM adjustment will be recognised in the statement of profit or loss. The IASB decided to change the mechanics of the DRM model to this approach and move this project to the standard-setting programme.

Maintenance and consistent application

At its April 2022 meeting, the IFRS Interpretations Committee decided to finalise an agenda decision in response to a submission about whether, in applying IFRS 15, a reseller of software licences is a principal or agent. No IASB members objected to the finalisation of the agenda decision.

Post-implementation Review of IFRS 9

Most respondents to the PIR Request for Information (RFI) agreed that generally the IFRS 9 classification and measurement requirements work as intended, indicating that there is not a need for fundamental changes to the requirements. However, feedback indicated that the IASB could help entities with consistent application by clarifying particular aspects of the SPPI requirements. This was indicated in particular by the many questions raised by respondents about how to apply the SPPI requirements to financial assets with ESG-linked features, and about the scope of the requirements for contractually-linked instruments (CLIs). The IASB decided to start a standard-setting project to clarify particular aspects of the requirements for assessing a financial asset’s contractual cash flow characteristics (paragraphs B4.1.7−B4.1.26 of IFRS 9).

Second Comprehensive Review of the IFRS for SMEs Accounting Standard

At its May 2021 meeting, the IASB started deliberating specific sections of the IFRS for SMEs Accounting Standard that could be aligned with new requirements in IFRS Accounting Standards in the scope of the review. At this meeting, the IASB deliberated: feedback on the scope (including the definition of public accountability) and name of the IFRS for SMEs Accounting Standard; topics identified when developing the ED after considering the tentative decisions made by the IASB in deliberating this comprehensive review that are either potential inconsistencies or sweep issues; transition requirements for an entity applying the amendments to the IFRS for SMEs Accounting Standard for the first time; and the effective date of the amendments to be proposed. The IASB voted in favour of all of the staff recommendations, which are set out in the more detailed summaries.

Goodwill and Impairment

As part of the IASB’s work, the staff have performed further analysis on specific aspects of respondents feedback on the subsequent accounting for goodwill. The purpose of this meeting was to provide the IASB with a summary of the staff research. The agenda paper also provided information about the project plan and how this research is relevant to that plan. The IASB was not be asked to make any decisions during this session. The IASB discussed the feasibility of estimating the useful life of goodwill and the pattern in which it diminishes; the auditability of the useful life of goodwill; the usefulness of information associated with managements’ estimates of the useful life of goodwill; and potential consequences of transitioning to an amortisation-based model.

Rate-regulated Activities

The IASB continued redeliberating the proposals in Exposure Draft ED/2021/1 Regulatory Assets and Regulatory Liabilities. The IASB decided that the final standard clarify that for a regulatory asset or a regulatory liability to arise, it is necessary that differences in timing originate from, and reverse through, amounts included in the regulated rates that an entity accounts for as revenue applying IFRS 15. The IASB also decided that the final standard would not exclude from its scope regulatory assets or regulatory liabilities related to financial instruments within the scope of IFRS 9.

Disclosure Initiative—Targeted Standards-level Review of Disclosures

The purpose of this meeting was for the IASB to discuss the feedback from comment letters on ED/2021/3 Disclosure Requirements in IFRS Standards—A Pilot Approach. The cover paper included the background to the project as well as the following summary of the key messages in the comment letters. Almost all respondents agreed that the IASB should engage early with users of financial statements and other stakeholders when developing disclosure requirements in IFRS Accounting Standards, integrate development of disclosure requirements with the rest of the accounting model and consider implications for digital reporting. The IASB was not asked to make any decisions in this session.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The IASB decided to proceed to finalise the draft standard with the scope as proposed in the ED, but did not commit to review the scope of the draft standard as part of the PIR of the standard. The IASB decided to clarify the proposals to assist in understanding the definition of public accountability and that an intermediate parent assesses its eligibility to use the draft standard in its separate financial statements on the basis of its own status without considering whether other group entities have, or the group as a whole has, public accountability.

An analysis of how the IASB’s work plan has changed as a result of the meeting is available here.

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