Feedback on Proposed IFRS Taxonomy Update—Amendments to IFRS 16 and IAS 1 (Agenda Paper 25)

In November 2022, the IASB published the Proposed IFRS Taxonomy Update—Lease Liability in a Sale and Leaseback and Non-current Liabilities with Covenants. The 30-day comment letter period closed on 28 December 2022.

The Proposed IFRS Taxonomy Update (PTU) included proposals for changes to the IFRS Accounting Taxonomy to reflect disclosure requirements arising from

• Lease Liability in a Sale and Leaseback, which amended IFRS 16 and was issued in September 2022
• Non-current Liabilities with Covenants, which amended IAS 1 and was issued in October 2022

On the latter, one respondent commented that modelling separate detailed text block elements for information about the covenants, and facts and circumstances, if any, that indicate the entity may have difficulty complying with the covenants was unnecessary because the narrative information required by those subparagraphs would not be separately understandable and is likely to be integrated, making it difficult to tag using two elements. The staff agree with this comment and plan to model a single detailed text block to reflect the narrative disclosure requirements.

Two respondents suggested that it may be useful to group the elements relating to the disclosure of non-current liabilities with covenants in a taxonomy presentation group with the elements for other financial instrument disclosures as it is likely the information arising from the amendment would be included in note disclosures on financial liabilities. The staff agree with these comments and plan to include the elements relating to the disclosures arising from the amendment in two presentation groupings:

• ‘[810000] Notes – Corporate information and statement of IFRS compliance’
• ‘[822390] Notes - Financial instruments’

The PTU was reviewed by the members of the IFRS Taxonomy Consultative Group (ITCG) before its publication.

The purpose of this meeting was to:

• Summarise the feedback received on the PTU and the staff analysis thereof
• Summarise the next steps in the publication of the IFRS Taxonomy Update
• Ask the IASB if they have any questions or comments on the feedback received or next steps

IASB discussion

One IASB member said that he disagreed with the staff’s plan to model a single detailed text block to reflect the narrative disclosure requirements of IAS 1. In his view this would lead to a loss of information. This was supported by another IASB member who said that disaggregation is important for some jurisdictions. However, one IASB member replied that the information provided would be the same, however it would improve the format in terms of the taxonomy. The staff said that the introduction of categorical elements will be considered as part of the future development of the taxonomy, and this may help to resolve the issue.

One IASB member did not understand why the disclosures from amendments should be presented in grouping 810000 as the information is unrelated to the statement of IFRS compliance. The staff responded that any IAS 1 information that is unrelated to the primary financial statements is included in 810000, so this would be consistent what has previously been done. The staff conceded that the description of the presentation group may be misleading.

There was another comment that the element label ‘non-current liabilities with covenants’ is misleading as the tagging would only apply to non-current liabilities with covenants that are being tested. The staff replied that preparers should not rely on the element label but should look at the underlying disclosure requirement.

IASB decision

The Chair suggested to go with one text block now, as recommended by the staff, but to review that decision after categorical elements have been introduced. None of the IASB members disagreed with this view.