Agenda papers for this meeting are available on the IFRS Foundation's website.

The IASB met in London on 19-22 February. The following topics were discussed:

Work plan: The staff gave an oral update on the forthcoming IFRS 19 Subsidiaries without Public Accountability: Disclosures.

Equity method: The IASB decided to clarify several matters arising from its tentative decisions and to propose amendments to IFRS Accounting Standards. The IASB also decided which of the disclosure requirements to be proposed in the future exposure draft will also be proposed as amendments to the forthcoming IFRS 19.

Second comprehensive review of the IFRS for SMEs standard: The IASB made decisions on the proposals in the ED Third edition of the IFRS for SMEs Accounting Standard on Section 9 Consolidated and Separate Financial Statements, Section 19 Business Combinations and Goodwill and Section 23 Revenue from Contracts with Customers.

Maintenance and consistent application: The IASB confirmed the proposed amendments in exposure draft Annual Improvements to IFRS Accounting Standards—Volume 11. The IASB also discussed its project on use of a hyperinflationary presentation currency by a non-hyperinflationary entity (IAS 21), and made decisions on the disclosure and transition requirements.

Post-implementation review (PIR) of IFRS 9—impairment: The IASB considered the feedback received in response to its request for information Post-implementation Review—IFRS 9 Financial Instruments—Impairment. The IASB made decisions on the two overarching areas of the impairment requirements—the general approach to recognition of the expected credit loss (ECL) and determining significant increases in credit risk (SICR).

PIR of IFRS 15 Revenue from Contracts with Customers: The IASB considered the feedback received in response to its request for information Post-implementation Review—IFRS 15 Revenue from Contracts with Customers. The IASB made decisions with regard to identifying performance obligations in a contract, principal versus agent considerations and licensing.

Power purchase agreements: The staff provided an update on the project and outlined the next steps for the project.

IFRS 9 amendments to classification and measurement: The IASB made decisions on the disclosure requirements relating to contractual terms that could change the contractual cash flows of financial assets and financial liabilities not measured at fair value through profit or loss; and the effective date and transition requirements for the final amendments. The IASB also gave permission to begin the balloting process for the final amendments and decided which of the new or amended disclosure requirements should apply to subsidiaries without public accountability.

Rate-regulated activities: The IASB made decisions on the proposals in the exposure draft Regulatory Assets and Regulatory Liabilities, in particular on the boundary of a regulatory agreement, amendments to IAS 36 and disclosure.

Oral update

The staff gave an oral update on the forthcoming IFRS 19 Subsidiaries without Public Accountability: Disclosures. The standard will now be published in May 2024 instead of April 2024 to give the staff more time to perform the required quality checks. As a consequence, the catch-up exposure draft, with which the IASB will consult stakeholders on requirements arising from IFRS Accounting Standards that have been issued or amended since the IASB published the Exposure Draft Subsidiaries without Public Accountability: Disclosures in July 2021, will be published in July 2024 instead of June 2024.

Towards an Exposure Draft—Cover paper (Agenda Paper 13)

The objective of the equity method project is to develop answers to application questions about the equity method, as set out in IAS 28, using the principles derived from IAS 28 where possible.

The purpose of this meeting was to ask the IASB to:

• clarify several matters arising from its tentative decisions and decide whether to propose amendments to IFRS Accounting Standards; and
• consider which, if any, of the disclosure requirements to be proposed in the future exposure draft should also be proposed as amendments to the forthcoming IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures (the subsidiaries standard).

This paper was not discussed as it was an overview paper.

Towards an Exposure Draft—Clarifications to the IASB’s tentative decisions (Agenda Paper 13A)

At its November 2023 meeting, the IASB completed its technical discussions on the application questions in the scope of the equity method project.

The purpose of this meeting was to ask the IASB to clarify several matters arising from its tentative decisions and decide whether to propose amendments to IFRS Accounting Standards.

Staff recommendation

The staff recommended that the IASB proposes:

• to clarify that if a parent entity has elected to use the equity method to account for its investments in subsidiaries in its separate financial statements, the parent applies IAS 28:24 to a step acquisition of a subsidiary (that is, the parent entity does not remeasure the previously held interest to which it has applied the equity method) (Recommendation 1);
• to retain the project’s scope, by not adding the following application questions:
  • How should a parent entity measure the cost of its investment in a subsidiary acquired in stages and accounted for at cost in separate financial statements? (Recommendation 2A)
  • How does an entity recognise the acquisition-related cost for investments to which the entity applies the equity method of accounting? (Recommendation 2B);
• to clarify that an investor or a joint venturer applies the IASB’s tentative decisions to contingent consideration arrangements and deferred taxes when it purchases an additional interest in an associate or a joint venture (Recommendation 3); and
• to amend IAS 28:10 to refer to “changes in the investor’s share in the associate’s net assets” (Recommendation 4).

IASB discussion

Almost all IASB members supported Recommendation 1 as that would support having just one equity method and would help in reducing diversity in applying the method. One IASB member did not support Recommendation 1 and preferred the staff’s alternative recommendation to allow an accounting policy option which would be useful for entities, especially in certain jurisdictions, where the current practice might not be aligned to Recommendation 1 and separate financial statements are used for various purposes.

On Recommendations 2A and 2B, almost all IASB members agreed with the staff recommendation as they were out of the scope of this project. On Recommendation 2B, a few IASB members mentioned that the recognition of acquisition-related costs had already been implicitly answered before. A few IASB members and the IASB Chair suggested that this could form part of the basis for conclusions to the standard.

All IASB members agreed with Recommendation 3.

Most IASB members agreed with Recommendation 4 on the basis that it would make the two paragraphs within IAS 28 consistent. A few IASB members said that this probably did not need a clarification as an issue had not been raised in the past related to it. One IASB member did not support Recommendation 4 as he did not see any inconsistence within IAS 28 and any amendments could have knock-on consequences that might not yet have been considered.

IASB decision

On Recommendation 1, 13 of the 14 IASB members voted in favour of the staff recommendation.

On Recommendations 2A and 2B, 13 IASB members voted in favour of the staff recommendation.

On Recommendation 3, all IASB members voted in favour of the staff recommendation.

On Recommendation 4, 13 IASB members voted in favour of the staff recommendation.

Towards an Exposure Draft—Interaction with the IASB’s project Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures (Agenda Paper 13B)

The purpose of this paper was to ask the IASB to consider which, if any, of the disclosure requirements to be proposed in the future exposure draft, should also be proposed as amendments to the subsidiaries standard.

Staff recommendation

The staff recommended that the IASB proposes amendments to the subsidiaries standard to require an eligible subsidiary to disclose:

• on obtaining significant influence in an associate or joint control of a joint venture—the amount of contingent consideration recognised as part of the cost of the investment, a description of the contingent consideration arrangement and the basis for determining the amount of the payment (Recommendation 1);
• for each subsequent reporting period until the eligible subsidiary collects or settles the contingent consideration or until it is cancelled or expires—any changes in the recognised amounts, including any differences arising upon settlement, and the valuation techniques and key model inputs used to measure the contingent consideration (Recommendation 2);
• a reconciliation between the opening and closing carrying amount of its investments in associates and joint ventures (Recommendation 3); and
• gains or losses on downstream transactions to its associates, joint ventures and subsidiaries when a parent elects to use the equity method to account for its investments in subsidiaries in separate financial statements as permitted in IAS 27 (Recommendation 4).

IASB discussion

All IASB members agreed with Recommendations 1 and 2.

Many IASB members did not support Recommendation 3 as they noted that the benefits might not exceed the costs of preparing the reconciliation at the subsidiary level and that it might not provide useful information to the users of the financial statements. However, a few IASB members thought that the reconciliation could provide useful information and the costs of preparing it might not be high. This is because the information is likely to be required in any case for the consolidated financial statements, auditors, entity’s internal controls, etc. It was also mentioned that removing this disclosure requirement could require bringing back other disclosure requirements that were not separately considered. A few IASB members proposed that it should be included in the exposure draft and a conclusion should be made based on the feedback in that.

On Recommendation 4, most IASB members agreed with the staff recommendation. One IASB member proposed including it in the exposure draft to assess if there was any value in that disclosure.

IASB decision

On Recommendation 1 and 2, all IASB members voted in favour of the staff recommendation.

On Recommendation 3, only 4 of the 14 IASB members voted in favour of the staff recommendation.

On Recommendation 4, 11 IASB members voted in favour of the staff recommendation.

Cover paper (Agenda Paper 30)

In September 2022, the IASB published Exposure Draft Third edition of the IFRS for SMEs Accounting Standard (ED). The ED was open for comment for 180 days, which ended on 7 March 2023.

At the February 2024 IASB meeting, the IASB continued its redeliberations of the proposals in the ED.

Proposed amendments to Section 9 Consolidated and Separate Financial Statements (Agenda Paper 30A)

The purpose of this paper was for the IASB to consider feedback on its proposal in Section 9 Consolidated and Separate Financial Statements of the ED and ask the IASB to decide whether to amend Section 9 of the IFRS for SMEs Accounting Standard.

Staff recommendation

The staff recommended that the IASB should:

• delete paragraph 9.23(b) of the IFRS for SMEs Accounting Standard which requires an SME to disclose the basis for concluding that control exists when the parent does not own, directly or indirectly through subsidiaries, a majority of the voting rights of the other entity; and
• update paragraph 8.6 of Section 8 Notes to the Financial Statements of the standard to include examples of the types of judgements that management might have made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

IASB discussion

IASB members were supportive of the staff recommendation to have a single requirement in paragraph 8.6 of the standard. The disclosure of judgements made when applying the control model (i.e. judgements made by SMEs in determining whether it controls or does not control another entity) should be added as an example of a disclosure meeting the requirement in paragraph 8.6.

IASB decision

All IASB members voted in favour of the staff recommendation.

Proposed amendments to Section 19 Business Combinations and Goodwill (Agenda Paper 30B)

The purpose of this paper was to ask the IASB to consider feedback on the proposals in the ED to align Section 19 Business Combinations and Goodwill of the IFRS for SMEs Accounting Standard with the acquisition method of accounting in IFRS 3 and decide whether to proceed with its proposals in the ED to amend Section 19 of the standard.

Staff recommendation

The staff recommended that the IASB should make the following amendments to Section 9 of the IFRS for SMEs Accounting Standard in the ED among other proposals:

• Introduce requirements for an acquisition achieved in stages (step acquisitions) as set out in IFRS 3
• Not introduce the fair value option for measuring non-controlling interest in the acquiree
• Not introduce application guidance, as set out in IFRS 3:B36 and B53, on reacquired rights regarding the settlement of pre-existing relationships
• Remove the non-mandatory appendix to Section 19 (Appendix B) and include those examples in separate educational material and consider suggestions for additional guidance and illustrative examples when updating the separate educational material

IASB discussion

IASB members agreed with the staff recommendation to introduce step acquisition accounting as set out in IFRS 3 given the strong evidence received in the feedback which satisfies the relevance principle in the IASB’s alignment approach.

IASB members were supportive of not introducing the fair value option for measuring non-controlling interest in the acquiree since introducing such an option increases complexity and reduces comparability.

IASB members were supportive of moving the non-mandatory appendix to Section 19 (Appendix B) to separate educational material in line with the IASB discussion in September 2023. The discussion was in relation to which type of guidance to include in the standard and which to include in educational material and included a suggestion to move non-mandatory guidance from the standard to separate educational material for consistency. This will keep the standard concise.

IASB decision

All IASB members voted in favour of the staff recommendations.

Proposed revised Section 23 Revenue from Contracts with Customers—Redeliberation topics (Agenda Paper 30C)

The purpose of this paper was to ask the IASB to consider feedback on eight topics where stakeholders requested changes to, or raised concerns about, the requirements proposed in Section 23 Revenue from Contracts with Customers of the ED and to decide whether to change the requirements proposed in the ED.

Staff recommendation

The staff recommended that the IASB should:

• remove the option for an SME to account for a contract modification as a separate contract if the modification meets the criteria in paragraph 23.15(a)–(b) of the ED. Instead, require an SME to account for a contract modification as a separate contract if the modification meets the criteria in paragraph 23.15(a)-(b) of the ED;
• remove the requirement for an SME to determine if the effect of accounting for an option that provides a material right to a customer as a separate promise is significant to the individual contract. Instead, require an SME to account for an option that provides a material right to a customer as a separate promise, unless doing so involves undue cost or effort;
• remove the requirement for an SME to recognise the incremental costs of obtaining a contract as an asset if the SME can identify and assess the costs as recoverable without undue cost or effort. Instead, require an SME to recognise costs to obtain a contract as an expense when incurred; and
• retain the proposed requirements on:
  • performance obligation/promise terminology;
  • measuring variable consideration;
  • non-cash consideration (but include the term ‘barter’ in the description of non-cash consideration; and present separately the requirement to measure the fair value of non-cash consideration and the exemption from the requirement to measure the fair value of non-cash consideration);
  • allocation based on stand-alone selling prices (but include guidance on methods for estimating the standalone selling price in separate educational material instead of the revised Section 23); and
  • allocating variable consideration (but combine the requirements for allocating variable consideration and discounts).

IASB discussion

IASB members agreed with the staff recommendation to require an SME to account for a contract modification as a separate contract if the modification criteria are met. IASB members noted that the justification for introducing such a requirement is clear in the staff paper. They conceded that the proposed simplification in the ED is not straightforward to apply.

Overall, IASB members were supportive of the staff recommendation to require an SME to account for an option within a contract that provides a material right to a customer as a separate promise, unless doing so involves undue cost or effort. One IASB member raised concerns over whether the undue cost or effort exemption would lead to inappropriate accounting when those options are material in economic terms.  However, the IASB member acknowledged that the undue cost or effort exemption addresses concerns about SMEs that do not have systems to capture information about customer options. Therefore, the IASB member agreed with the staff recommendation as there are no better alternatives here.

IASB members agreed that costs to obtain a contract are normally immaterial in an SME context while the cost of applying the proposed requirements to recognise such costs as an asset is higher than its benefits. In addition, the users of SME accounts focus on cash flows rather than the timing of expense. Therefore, IASB members supported to expense such costs.

IASB members agreed with the staff recommendation to use the term ‘promise’ in the revised Section 23, instead of the term ‘performance obligation’ for simplification. IASB members noted that no difficulties were identified by participants in the fieldwork to apply the simplified terminology. In addition, ‘promise’ is easier for the SMEs community to understand. Some IASB members raised concerns that using the term ‘promise’ in the IFRS for SMEs standard would be confusing for preparers and for users that are familiar with IFRS 15. The staff explained that the different terms do not directly change the outcome reached by an entity when determining if a good or service is distinct.

IASB members agreed to retain the requirements proposed in the ED for measuring variable consideration in the revised Section 23 although they acknowledged some complex contracts can be challenging when determining variable consideration.

No objections were made in relation to the staff recommendations for non-cash consideration, allocation based on stand-alone selling prices and allocating variable consideration.

IASB decision

All IASB members voted in favour of the staff recommendations.

Cover paper (Agenda Paper 12)

In this session, the IASB discussed the following maintenance and consistent application topics:

• Analysis of feedback received in response to exposure draft Annual Improvements to IFRS Accounting Standards—Volume 11:
• Use of a hyperinflationary presentation currency by a non-hyperinflationary entity (IAS 21):
  • Disclosure and transition requirements
  • Due process requirements

This paper was not discussed as it was an overview paper.

Annual Improvements to IFRS Accounting Standards—Hedge Accounting by a First-time Adopter (Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards): Analysis of feedback (Agenda Paper 12A)

This paper analysed the feedback on hedge accounting by a first-time adopter. The IASB proposed to amend IFRS 1:B5-B6 to improve the consistency of these paragraphs with the requirements in IFRS 9 and to add cross-references to improve the accessibility and understandability of IFRS Accounting Standards.

Staff recommendation

The staff recommended that the IASB finalise the proposal with no changes.

IASB discussion

One IASB member preferred not to reference accounting manuals of large accounting firms as this could imply that the aim of the IASB is to conform to existing practice. The staff clarified that the reference to the accounting manual of large accounting firms is merely to demonstrate there is no diversity in practice.

IASB decision

All IASB members agreed with the staff recommendation.

Annual Improvements to IFRS Accounting Standards—Gain or Loss on Derecognition (Amendments to IFRS 7 Financial Instruments: Disclosures): Analysis of feedback (Agenda Paper 12B)

This paper analysed the feedback on gain or loss on derecognition. The IASB proposed to amend paragraph IFRS 7:B38 to update an obsolete cross-reference.

Staff recommendation

The staff recommended that the IASB finalise the proposal with no changes.

IASB discussion

No IASB member raised a comment on the paper.

IASB decision

All IASB members agreed with the staff recommendation.

Annual Improvements to IFRS Accounting Standards—Introduction and Credit Risk Disclosures (Amendments to Guidance on implementing IFRS 7): Analysis of feedback (Agenda Paper 12C)

This paper analysed the feedback on introduction and credit risk disclosures. The IASB proposed to amend IFRS 7:IG1 to add a statement clarifying that the guidance does not illustrate all the requirements in IFRS 7. The IASB also proposed to amend IFRS 7:IG20B to simplify its wording.

Staff recommendation

The staff recommended that the IASB finalises the proposed amendment to IFRS 7:IG1 with a minor wording change and the proposed amendment to IFRS 7:IG20B with no changes.

IASB discussion

No IASB member raised a comment on the paper.

IASB decision

All IASB members agreed with the staff recommendation.

Annual Improvements to IFRS Accounting Standards—Disclosure of Deferred Difference between Fair Value and Transaction Price (Amendments to Guidance on implementing IFRS 7): Analysis of feedback (Agenda Paper 12D)

This paper analysed the feedback on disclosure of deferred difference between fair value and transaction price. The IASB proposed to amend IFRS 7:IG14 to improve its consistency with IFRS 7:28.

Staff recommendation

The staff recommended that the IASB finalise the proposal with a minor wording change.

IASB discussion

No IASB member raised a comment on the paper.

IASB decision

All IASB members agreed with the staff recommendation.

Annual Improvements to IFRS Accounting Standards—Derecognition of Lease Liabilities (Amendments to IFRS 9 Financial Instruments): Analysis of feedback (Agenda Paper 12E)

This paper analysed the feedback on derecognition of lease liabilities. The IASB proposed to amend IFRS 9:2.1(b)(ii) to add a cross-reference to IFRS 9:3.3.3. The purpose of that proposed amendment is to resolve potential confusion for a lessee applying the derecognition requirements in IFRS 9.

Staff recommendation

The staff recommended that the IASB finalise the proposal with no changes.

IASB discussion

IASB members asked the staff to highlight that this is a narrow-scope annual improvement, and it is not intended to address concerns raised by respondents in relation to the interaction between IFRS 9, IFRS 16 and IFRS 15. In addition, some IASB members asked the staff to clarify that the proposed amendments do not affect the existing modification requirements of IFRS 16 but this amendment is merely to confirm that extinguishments of lease liabilities are in scope of IFRS 9.

IASB decision

All IASB members agreed with the staff recommendation.

Annual Improvements to IFRS Accounting Standards—Transaction Price (Amendments to IFRS 9 Financial Instruments): Analysis of feedback (Agenda Paper 12F)

This paper analysed the feedback on transaction price. The IASB proposed to amend IFRS 9:5.1.3 and Appendix A of IFRS 9 to clarify the use of the term ‘transaction price’.

Staff recommendation

The staff recommended that the IASB finalise the proposals with no changes.

IASB discussion

No IASB member raised a comment on the paper.

IASB decision

All IASB members agreed with the staff recommendation.

Annual Improvements to IFRS Accounting Standards—Determination of a ‘De Facto Agent’ (Amendments to IFRS 10 Consolidated Financial Statements): Analysis of feedback (Agenda Paper 12G)

This paper analysed the feedback on determination of a ‘de facto agent’. The IASB proposed to remove from IFRS 10:B74 an inconsistency with IFRS 10:B73.

Staff recommendation

The staff recommended that the IASB finalise the proposal with a minor wording change.

IASB discussion

One IASB member asked the staff to amend IFRS 10:B74 to say “… A party might also be a de facto agent when those that direct the activities of the investor have the ability to direct that party to act on the investor’s behalf…” rather than “… a de facto agent of the investor…” because this is consistent with the description of de facto agent in IFRS 10:B73.

IASB decision

All IASB members agreed with the staff recommendation.

Annual Improvements to IFRS Accounting Standards—Cost Method (Amendments to IAS 7 Statement of Cash Flows): Analysis of feedback (Agenda Paper 12H)

This paper analysed the feedback on ‘cost method’. The IASB proposed to amend IAS 7:37 to remove a reference to ‘cost method’ that is no longer defined in IFRS Accounting Standards.

Staff recommendation

The staff recommended that the IASB finalise the proposals with no changes.

IASB discussion

One IASB member asked the staff to clarify that this amendment does not affect how ‘cost’ is interpreted in IAS 27.

IASB decision

All IASB members agreed with the staff recommendation.

Annual Improvements to IFRS Accounting Standards—Effective date and due process (Agenda Paper 12I)

This paper asked the IASB whether it agrees with the staff recommendation with respect to the effective date for the amendments and sets out the steps in the IFRS Foundation Due Process Handbook that the IASB has taken in developing the amendment. In addition, this paper asked the IASB to confirm that it is satisfied that it has complied with the due process requirements and asks whether any IASB member intends to dissent from the amendments.

Staff recommendation

The staff recommended that the IASB require an entity to apply the amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and IAS 7 for annual reporting periods beginning on or after 1 January 2026, with earlier application permitted and to finalise the amendments without re-exposure.

IASB discussion

One IASB member asked the staff to clarify whether the amendments will be applied retrospectively.

IASB decision

All IASB members agreed with the staff recommendations regarding the effective date of the annual amendments.

All IASB members agreed with the steps taken in the IFRS Foundation Due Process Handbook in developing the amendment.

All IASB members confirmed that it is satisfied that it has complied with the due process requirements.

There are no IASB members intending to dissent from the amendments.

Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity (IAS 21)—Disclosure and transition requirements and other matters (Agenda Paper 12J)

At its December 2023 meeting, the IASB tentatively decided to propose narrow-scope amendments to IAS 21. The proposed amendments would provide a new translation method for presenting the financial information of a non-hyperinflationary entity in a hyperinflationary presentation currency that would improve the usefulness and comparability of the reported financial information.

The purpose of this meeting was to discuss remaining aspects of the proposed amendments and ask the IASB for permission to begin the process for balloting the exposure draft proposing these amendments.

Staff recommendation

Disclosure requirements

The staff recommended:

• requiring an entity that translates the results and financial position of a foreign operation that has a non-hyperinflationary functional currency into a hyperinflationary presentation currency to disclose summarised financial information about that foreign operation;
• requiring an entity within the scope of the proposed amendments to disclose the fact that the entity’s financial statements (or results and financial position of the entity’s foreign operation) and corresponding figures for previous periods have been translated at the closing rate at the date of the most recent statement of financial position; and
• requiring an entity whose presentation currency ceases to be hyperinflationary to disclose that fact.

Transition and early application

The staff recommended:

• requiring an entity that already applies IFRS Accounting Standards to apply the amendments retrospectively in accordance with IAS 8 when that entity first applies the proposed amendments;
• exempting an entity that already applies IFRS Accounting Standards from disclosing the information required applying IAS 8:28(f) when that entity first applies the proposed amendments;
• not providing transition relief for first-time adopters; and
• permitting an entity that already applies IFRS Accounting Standards to apply the proposed amendments earlier than the effective date and to require an entity that applies the amendments for an earlier period to disclose that fact.

Presentation currency becoming or ceasing to be hyperinflationary

The staff recommended:

• not including specific requirements to address situations in which an entity’s presentation currency becomes hyperinflationary; and
• if an entity’s presentation currency ceases to be hyperinflationary, requiring the entity to apply IAS 21:39(b) prospectively to income and expenses arising after the end of the previous reporting period (i.e. the entity would not retranslate income and expenses arising before the end of the previous reporting period).

IASB discussion

IASB members were generally supportive of the staff recommendation. Some IASB members particularly liked that the disclosure requirements contain an embedded objective that serves as a ‘catch all’ for cases in which the specific disclosures do not provide sufficient information. One IASB member suggested to use the disclosure requirements in IFRS 12 as a starting point and top up as needed. In particular, he suggested that the materiality principle from IFRS 12 should be repeated for this amendment. The staff replied that the general materiality principle in IAS 1 applies. However, the IASB member thought it should be specifically mentioned in this amendment as it is also specifically mentioned in IFRS 12, and it should be clear that there is no difference between the two. The staff acknowledged the concern but also wanted to ensure that preparers have sufficient flexibility as to how to present the information. One IASB member suggested to include in the basis for conclusions to the amendments an explanation why the materiality principle is not repeated in the disclosure requirements for the amendments.

Other IASB members weighed in on this discussion and said that they agree that whether information should be presented in an aggregated or disaggregated form should be governed by materiality. They also emphasised that repetition of information should be avoided. If similar information is required by other standards, such as IFRS 5, IFRS 8 or IFRS 12, that information does not need to be repeated. If it is not presented in the same location, preparers should add a cross-reference to the relevant information instead of repeating the information. One IASB member suggested to disaggregate by currency and not by subsidiary.

IASB members did not raise any comments on the topic of transition and early application.

On presentation currency becoming or ceasing to be hyperinflationary, one IASB member suggested to ensure that consistency with IAS 29 is maintained. The staff confirmed that they will do that.

IASB decision

13 of the 14 IASB members voted in favour of the staff recommendations on disclosure requirements.

All IASB members voted in favour of the staff recommendations on transition, early application and presentation currency becoming or ceasing to be hyperinflationary.

Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity (IAS 21)—Due Process requirements (Agenda Paper 12K)

In this paper, the staff explained the steps in the IFRS Foundation Due Process Handbook that the IASB has taken in developing the proposed amendments to IAS 21, sought the IASB’s permission to begin the process for balloting the forthcoming exposure draft (ED), and asked whether any IASB member plans to dissent from the proposals in the forthcoming ED.

This paper was not discussed as the staff wanted the IASB to discuss a paper first on how any amendments to IAS 21 would affect the forthcoming IFRS 19 Subsidiaries without Public Accountability: Disclosures. That paper will be discussed at a future meeting.

Cover note (Agenda Paper 27)

In this meeting, the IASB deliberated the feedback received in response to its request for information (RFI) Post-implementation Review—IFRS 9 Financial Instruments—Impairment. The deliberation was focused on the two overarching areas of the impairment requirements—the general approach to recognition of the expected credit loss (ECL) and determining significant increases in credit risk (SICR).

This paper was not discussed as it was an overview paper.

Feedback analysis—General approach (Agenda Paper 27A)

This paper summarised the feedback received in response to the RFI on the general approach to recognition of ECL in IFRS 9.

Overall, the feedback from respondents was positive and they supported the general approach of recognising two different amounts (i.e. the 12-month and lifetime ECL) based on changes in credit risk since initial recognition. While almost all respondents saw no fatal flaws and considered the approach achieves an appropriate cost-benefits balance, they suggested reconsidering its application on some particular financial instruments.

Staff recommendation

The staff recommended that the IASB should not take any further action on the matters identified with regards to the general approach in IFRS 9 based on their analysis of the feedback. The staff plans to seek input from the IFRS Interpretations Committee (IFRS IC) to obtain further evidence on whether the application challenges reported for intragroup financial instruments have substantial consequences and whether they arise from a financial reporting issue that can be addressed by the IFRS IC.

IASB discussion

Overall, IASB members were supportive of the staff’s analysis and recommendation.

IASB members noted that the comments received from respondents on the general approach to recognition of ECL in IFRS 9 are an affirmation that the requirements introduced by the standard are working as intended. About the issues raised by respondents on some financial instruments, specifically on intragroup financial instruments, IASB members agreed with the staff analysis that the principles of IFRS 9 have sufficient guidance and allow entities to tailor the approach, considering reasonable and supportable information without undue cost. Further, on double counting issues highlighted by respondents on purchased financial assets that are not credit impaired, IASB members commented that bringing any additional requirements into the standard will only add further complexity. Some IASB members suggested that the board might want to consider the need for any additional education material. This may help in providing a steer towards better application of IFRS 9 requirements for intragroup instruments. Almost all IASB members agreed that seeking input from the IFRS IC would be useful, specifically on whether the application challenges reported for intragroup financial instruments have substantial consequences or not.

IASB decisions

All IASB members voted in favour of the staff recommendation.

Feedback analysis—Significant increases in credit risk (Agenda Paper 27B)

This paper summarised the feedback received in response to the RFI on the requirements in IFRS 9 for determining SICR.

Almost all respondents expressed support for the principles-based approach, stating that there are no fundamental questions (fatal flaws) with the requirements. Many preparers noted that the absence of prescribed methods for assessing SICR in IFRS 9 enables entities to tailor their approaches based on instrument characteristics, industry context, and their credit risk management practices. However, applying judgement is necessary and varying practices are also inherent in the alignment between accounting and credit risk management practice without which benefits of any comparability would be limited. Many respondents (prudential and securities regulators, some standard-setters and accounting firms) expressed concerns that despite the principles and guidance, there is inconsistent application of requirements IFRS 9 and the varying practices are not always justified by differences in how entities manage credit risk.

Staff recommendation

The staff recommended that the IASB take no further action on matters identified with regards to requirements for determining SICR based on their analysis of the feedback. The staff will consider feedback on potential enhancements to disclosure requirements on determining SICR at a future IASB meeting, along with feedback for other disclosures.

IASB discussion

Most of the IASB members were in support of the staff recommendation to take no further action and to not issue any further illustrative examples or additional application guidance on requirements for determining SICR. They agreed with the staff recommendation that any such illustrative examples will be limited to specific complex fact patterns. Therefore, they would be unlikely to help many entities as the outcome could be dependent on small changes to facts and circumstances. IASB members further highlighted that the concerns expressed by respondents reflect an application issue with the requirements by different entities rather than an issue with the underlying principles in the standard. One of the IASB members suggested that there is scope for the board to look further at the issues flagged by respondents around varying practices in disclosures on SICR and how entities are applying the requirements in their disclosures.

IASB decision

13 of the 14 IAS members voted in favour of the staff recommendation.

Literature review update (Agenda Paper 27C)

This paper provided a summary of the additional academic literature identified relevant to the PIR of the impairment requirements in IFRS 9 since the initial review done in February 2023.

The IASB members are welcome to ask any questions or make any comments on the updated review of the academic literature summarised in this paper.

IASB discussion

IASB members noted that the academic literature review indicates that applying the ECL model in IFRS 9 improves the timely recognition of credit losses compared to the approach in the incurred loss model.

IASB members also discussed that the unintended consequences of the application of the ECL model as noted from the academic literature review, including increased credit monitoring of borrowers by banks and reduced lending to borrowers, would be expected and reflects improvement in controls noted by banks on credit risk monitoring. The academic studies suggest that the statistical model for ECL cannot be applied during times such as COVID-19. Therefore, post-model adjustments (PMAs) might be required to be applied for the ECL model to work effectively in such scenarios. One of the IASB members suggested that the board should consider monitoring further PMAs and whether they are applied in “normal” times as well.

Cover paper (Agenda Paper 6)

The comment period for the request for information Post-implementation Review—IFRS 15 Revenue from Contracts with Customers (RFI) ended on 27 October 2023. The IASB discussed the general feedback from respondents in its January 2024 meeting.

This paper introduced the papers for this meeting and provided a reminder of the IASB’s framework for deciding whether and when to take further action in response to specific application matters.

This paper was not discussed as it was an overview paper.

Identifying performance obligations in a contract (Agenda Paper 6A)

This paper summarised the feedback, staff analysis and staff recommendations on Question 2 of the RFI related to identifying performance obligations in a contract (including identifying performance obligations in licensing arrangements) requirements of IFRS 15.

Staff recommendation

The staff recommended that the IASB:

• take no further action on application matters raised by respondents in relation to:
  • identifying performance obligations in multi-element arrangements;
  • identifying a promise to transfer goods or services; and
  • convergence with ASC Topic 606;
• take no further action on other application matters raised by a few respondents which are summarised in Appendix A of the paper; and
• discuss later whether to add some explanations from IFRS 15:BC105 and BC116K of the basis for conclusions (BC) to IFRS 15, along with possible clarifications of the other aspects of IFRS 15;

IASB discussion

With regard to the first two staff recommendations, IASB members reiterated that entities must apply professional judgement and it is not possible to eliminate the application difficulty with respect to making significant judgments by adding additional guidance or examples in the standard. IASB members stated that the feedback does not endorse the need to have any major changes in IFRS 15.

On the third staff recommendation, a majority of IASB members stated that if any paragraphs in the BC contain principles, moving them to the main body of the standard is appropriate. However, if the paragraphs only provide explanations to principles, including them in the main body of the standard will be very disrupting and will have a negative impact on accounting policies that have already been developed by reporting entities.

Some IASB members also informed that in some jurisdictions the BC has not been endorsed by the relevant authorities. Because of this, they are supportive that some paragraphs of the BC need to be added to the main standard. One IASB member also indicated that some small entities have no resources to assess all the available material in the BC and therefore, if any principles are present in the BC, they need to be moved to the main body of the standard.

IASB decision

All IASB members voted in favour of the first two staff recommendations, i.e. to not take any further action.

On the third recommendation, 9 out of the 14 IASB members voted that the board should discuss later whether to add some explanations from IFRS 15:BC105 and BC116K to IFRS 15.

Principal versus agent considerations (Agenda Paper 6B)

This paper summarised the feedback, staff analysis and staff recommendations on Question 5 of the RFI related to principal versus agent considerations of IFRS 15.

Staff recommendation

The staff recommend that the IASB:

• take no further action on application matters in relation to:
  • the relationship between the concept of control and the indicators in IFRS 15:B37;
  • identifying a customer of a supplier that sells its goods or services through an intermediary;
  • identifying performance obligations in a multi-party arrangement;
• discuss later whether to add some explanations from IFRS 15:BC385E and BC385H along with possible clarifications of other aspects of IFRS 15; and
• classify as low priority the application matter related to assessing control over services and intangible assets and explore the matter in the next agenda consultation.

IASB discussion

IASB members reiterated that by nature the principal versus agent requirements in IFRS 15 are complicated and it is imperative to apply judgements based on the indicators mentioned in IFRS 15.

On the second staff recommendation, IASB members had the same opinion as in the previous discussion (i.e. if there are any principles mentioned in the BC, they should be moved to the main body of the standard with care to cause no disruption).

On the third staff recommendation, an IASB member informed that when IFRS 15 was developed, the IASB mainly focused on tangible goods and therefore more guidance and indicators related to the determination of control for intangible goods should to be added in IFRS 15:38.

IASB decision

All IASB members voted in favour of the first staff recommendation (i.e. to take no further action).

IASB members voted in favour to discuss the second and the third staff recommendation in a future meeting.

Licensing (Agenda Paper 6C)

This paper summarised the feedback, staff analysis and staff recommendations on Question 6 of RFI related to licensing requirements (excluding identifying performance obligations in licensing arrangements) of IFRS 15.

Staff recommendation

The staff recommended that the IASB:

• take no further action on application matters in relation to:
  • accounting for licence renewals;
  • determining the nature of a licence;
  • determining the scope of licensing guidance; and
  • accounting for sales-based or usage-based royalties; and
• take no further action on other application matters raised by a few respondents which are summarised in Appendix A of the paper.

IASB discussion

IASB members did not raise any comments on this paper.

IASB decision

All IASB members voted in favour of the staff recommendation.

Project update (Agenda Paper 3)

Following the discussion with the IASB in January, the staff have undertaken outreach meetings with different groups of stakeholders, including the Accounting Standards Advisory Forum (ASAF). Most stakeholders are supportive of exploring narrow-scope amendments to better reflect power purchase agreements (PPAs) in the financial statements, both for own use and the hedge accounting requirements. However, concerns were raised for both the own-use and hedge accounting requirements.

The concerns around the own-use assessment relate to the ability to ringfence the application of the potential amendments, the feasibility of requiring an entity to estimate quantities ‘over the life of the contract’ as well as the costs of any disclosure requirements.

In relation to hedge accounting, concerns were raised about making amendments to the requirements more generally that cannot be restricted only to PPAs.

Based on the feedback received, the staff decided to consult further on the characteristics, potential amendments and disclosure requirements proposed, to ensure that stakeholder concerns are appropriately considered. The staff plan to bring the refinements to the potential amendments to the IASB meeting in March 2024 for discussion and decisions on the direction of the project.

IASB discussion

The staff informed the IASB that after the meeting with ASAF, the staff is working on refining the potential amendments. The staff is also having a number of outreach meetings with stakeholders to get their input on the project. Whilst this will delay the draft date of issuing the exposure draft in April, which will be pushed back to early May, the staff believe that the additional time taken now to engage with stakeholders will result in less comments on the exposure draft.

The staff plan to come back to the IASB in the March meeting with some potential amendments, for the IASB to make decisions on, including transition.

No decisions were made.

Cover paper (Agenda Paper  16)

In this meeting the staff presented its analysis and recommendations relating to feedback on:

• the disclosure requirements relating to contractual terms that could change the contractual cash flows of financial assets and financial liabilities not measured at fair value through profit or loss; and
• the effective date and transition requirements for the final amendments.

The staff will requested permission to begin the balloting process for the final amendments and considers which of the new or amended disclosure requirements should apply to subsidiaries without public accountability.

No discussion was held on this paper as this was an overview paper.

Feedback analysis—Disclosures—contractual cash flows (Agenda Paper 16A)

In March 2023, the IASB published the exposure draft Amendments to the Classification and Measurement of Financial Instruments (ED). In the ED, the IASB proposed:

• In paragraph 20B, to require entities to disclose the following for contractual terms that could change the timing or amount of contractual cash flows on the occurrence (or non-occurrence) of a contingent event that is specific to the debtor:
  • A qualitative description of the nature of the contingent event
  • Quantitative information about the range of changes to contractual
  • Cash flows that could result from those contractual terms
• In paragraph 20C to require entities to disclose the information in paragraph 20B separately for each class of financial assets measured at amortised cost or fair value through other comprehensive income and for each class of financial liabilities measured at amortised cost.

Many respondents, including most standard-setters, said that the proposed disclosures would provide useful information to users of financial statements. However, many other respondents, specifically banks and banking organisations, voiced strong objections against the proposed scope of the requirements. Their view was that the cost on preparers would outweigh any benefit to investors and provided suggestions to limit the scope.

Staff recommendation

The staff recommended finalising the proposed amendments to paragraph 20B and 20C of the ED subject to:

• referring to contractual terms that could change the amount of contractual cash flows based on a contingent event that is not directly related to a change in basic lending risks or costs (for example, the time value of money or credit risk) and including an example of a contractual term to which this disclosure requirement would apply; and
• not requiring an explicit disclosure of the range of possible adjustments but giving this as an example of the quantitative information about the adjustments to contractual cash flows that an entity should disclose.

IASB discussion

In the previous meeting, the IASB had agreed that when making the SPPI assessment, if the impact of the contingent event on the cash flows before and after the contingent event was not significant, the contingent event would not affect the SPPI assessment. An IASB member therefore challenged the need for these disclosures on a contract-by-contract basis if the impact is not material. The staff confirmed these disclosures could be provided on an aggregate basis if the impact is not significant on a contract-by-contract basis. Some wording will be added in the amendments to make this clear.

An IASB member asked the staff to confirm that the disclosures still require quantitative information and the staff confirmed that is the case.

IASB decision

All IASB members voted in favour of the staff recommendation.

Feedback analysis—Effective date and transition requirements (Agenda Paper 16B)

This paper focused on Question 7 of the ED which asked about the transition requirements for the amendments.

The ED did not propose an effective date but proposed to permit early application. The ED proposed that the amendments should be applied retrospectively and that an entity is not required to restate comparatives.

Many respondents recommended different effective dates for different parts of the amendments noting that more time would be needed to implement the amendments relating to the derecognition of financial liabilities.

A few respondents asked for clarification on how changes to the amount of cash and cash equivalents should be presented in the statement of cash flows upon initial application of the amended derecognition requirements if an entity decides not to restate prior periods. The staff considers that this is already answered in the proposals, where it is stated that if an entity does not restate prior periods, the entity shall recognise any difference between the previous carrying amount and the carrying amount at the beginning of the annual reporting period in which an entity initially apply the amendments. Therefore, a reconciliation would be provided to show the impact of the amendments.

Staff recommendation

The staff recommended finalising the transition requirements proposed in the ED and:

• set an effective date of annual reporting periods beginning on or after 1 January 2026; and
• permit entities to elect to early apply the amendments to the solely payments of principal and interest (SPPI) requirements together with the disclosure requirement in IFRS 7 relating to changes in contractual cash flows, without having to early apply the other amendments from the same date.

IASB discussion

The IASB discussion focused on whether the effective date of 1 January 2026 would give preparers sufficient time to implement the amendments to settlement date accounting. Some IASB members argued that this would be a significant change in cash reporting for most corporate companies, as they would need to analyse the banking systems in each country and adapt their systems, so the effective date should be pushed back to 1 January 2027. However, others argued that the effective date of 1 January 2026 should give preparers a sufficient amount of time, as they do not need to restate comparatives. The IASB prioritised this project over other projects due to high demand and therefore some IASB members were not keen to allow a long transition period.

An IASB member also highlighted that as some requirements can be early adopted, without having to apply the other amendments, the staff should connect with the taxonomy team to ensure there will be no issues with tagging.

IASB decision

For the effective date of annual reporting periods beginning on or after 1 January 2026, 8 members voted in favour of the staff recommendation.

All members voted in favour of permitting entities to early apply the amendments to the SPPI requirements together with the disclosure requirement in IFRS 7 relating to changes in contractual cash flows, without having to early apply the other amendments from the same date.

Due process steps (Agenda Paper 16C)

The staff recommended that the IASB should not re-expose the amendments to IFRS 9 and IFRS 7, as most respondents supported the proposals in the ED and also highlighted the urgency of the clarifications. The staff does not consider any of the changes made by the IASB since the ED as fundamental and requiring re-exposure.

IASB members were asked if they agree with the staff recommendation not to re-expose the proposals.

IASB members were asked if they intend to dissent from the publication of the amendments (NB: no IASB member dissented from the ED).

IASB members were asked if they are satisfied that the IASB has complied with the applicable due process requirements and that it has undertaken sufficient consultation and analysis to begin the balloting process for the amendments to IFRS 9 and IFRS 7.

IASB decisions

All members voted in favour of the staff recommendation not to re-expose the proposals.

Two members noted that they intend to dissent.

All members were satisfied that the IASB has complied with the applicable due process requirements.

Reduced disclosure requirements for subsidiaries without public accountability (Agenda Paper 16D)

The purpose of this paper was to ask the IASB to consider to what extent the new and amended disclosure requirements from the forthcoming amendments should apply to subsidiaries without public accountability.

Staff recommendations

The staff recommended to:

• not include the forthcoming amendments to disclosure requirements relating to equity instruments and other comprehensive income (IFRS 7:11A-11B); and
• to include the forthcoming disclosure requirements relating to contractual terms that could change the contractual cash flows of financial assets and financial liabilities not measured at fair value through profit or loss, as discussed in Agenda Paper 16A.

IASB voting

All members voted in favour of the staff recommendation.

Cover note (Agenda Paper 9)

In this session, the IASB continued to redeliberate the proposals in the exposure draft Regulatory Assets and Regulatory Liabilities (ED).

Boundary of a regulatory agreement (Agenda Paper 9A)

This paper set out the staff analysis and recommendations on the proposals on how the final standard could articulate the guidance on the boundary of a regulatory agreement, acknowledging the possibility of both finite and indefinite rights to supply goods or services (rights to operate).

Staff recommendation

The staff recommended that the final standard:

• acknowledges that rights to operate may be indefinite (Recommendation 1)
• requires that an entity that has an enforceable right to operate, should include all the unrecovered cash flows in the measurement of the regulatory asset or regulatory liability if the entity has an enforceable right on the following conditions:
  • Condition 1—to recover or obligation to fulfil all or substantially all of the regulatory asset or regulatory liability by adding amounts to or deducting amounts from future regulated rates charged over its life; or
  • Condition 2—on termination of the agreement, to receive or obligation to pay compensation for all or substantially all of the unrecovered regulatory asset or unfulfilled regulatory liability; and (Recommendation 2)
• requires that the entity, in cases where it has an enforceable right to operate but does not meet Conditions 1 or 2, determine the set of unrecovered or unfulfilled cash flows for which its legislative or regulatory frameworks provide sufficient assurance for recovery or fulfilment and include those cash flows in the measurement of a regulatory asset or regulatory liability (Recommendation 3)

IASB discussion

Several IASB members conveyed difficulty in understanding the concept of the indefinite right described in Recommendation 1 for the following reasons:

• It was mentioned that the term indefinite is not as intuitive as the phrase “non-cancellable” and “if cancellable then there will be compensation”.
• The split between identifying the boundary as a time band and identifying cash flows within a boundary is slightly artificial. The focus should be on the cash flows within the boundary combined with the enforceable right principle. Furthermore, the entity should consider the facts in paragraph 27 of the ED for distinguishment between indefinite and finite regardless of whether this term is included. Paragraphs 34 and B28 of the ED already explain that this as the latest future date. Consequently, a judgement must be made by the entity.
• It was questioned whether the accounting treatment should build on whether or not a contract is indefinite, as other accounting standards do not have a similar requirement. Ultimately, the outcome would be the same, but the concept should focus on whether the entity has the right to operate which is the basic principle.
• It is not necessary to bring this level of detail into the standard.

Some IASB members agreed with the staff that mentioning ‘indefinite’ is required but should not be the leading term and a holistic view should be taken.

None of the IASB members objected to Recommendation 1 but some IASB members were concerned about whether this phrase would be the best way to articulate the concept and also whether this wording should be in the body of the standard or in the application guidance.

The staff responded that defining the ‘indefinite’ notion helps to compare and acknowledge that there are different arrangements.

For Recommendations 2 and 3, IASB members suggested that the staff set out the recommendations in a diagram.

Most IASB members agreed with the overall concepts but had the following concerns:

• Recommendation 3 is not needed as this would lead to a two-layer assessment which adds complexity. It was mentioned that the cash flows included in the boundary should be those for which there is an enforceable right to recover or an enforceable obligation to pay. Therefore, distinguishment on whether it is substantially all or not would not matter.
• The addition of the wording around high-level assurance and sufficient assurance may not be appropriate. Some IASB members commented on the high level of assurance as an interpretation on what an enforceable right to collect might be. It was mentioned that there would be a risk of having this as interpretation guidance in the standard and it being perceived as an entity now having an enforceable right to collect when enforceability is by law, it was suggested that this phrase would work better as application guidance.
• One IASB member mentioned that the time value of money varies between Conditions 1 and 2 in Recommendation 2.
• The inclusion of new language weakens the concepts already explained in the ED and different words being used to describe the same thing causes confusion.

One IASB member agreed with the staff recommendations and mentioned that some level of guidance is critical. However, that IASB member was open to changes in the wording of the recommendations.

The staff responded that they agreed with all comments made by the IASB members in terms of combining Recommendations 2 and 3 and removing any wording that could add confusion.

Ultimately, the standard needs to include the enforceable right to the cash flows within the boundary.

IASB decisions

All IASB members voted in favour of the staff recommendations with the following amendments:

For Recommendation 1, the vote has been taken on the concept that contracts may be indefinite, and that wording will be provided in the application guidance on how to express this.  

For Recommendations 2 and 3, the vote has been taken based on paragraph 50 in the ED, however without the term “all or substantially all”.

Amendments to IAS 36 (Agenda Paper 9B)

This paper sets out the staff’s analysis and recommendations in relation to the amendments to IAS 36 proposed in the ED.

Staff recommendation

The staff recommended that the final standard:

• retains the proposal to exclude regulatory assets from the scope of IAS 36 (Recommendation 1)
• omits the amendments to IAS 36:43 and 79 (Recommendation 2)
• amends the basis for conclusions to IAS 36 to explain that, although regulatory assets are excluded from the scope of IAS 36, an entity would have to consider the cash flows arising from regulatory assets and regulatory liabilities when applying IAS 36:43 and 79 (to avoid double-counting future cash flows and to ensure consistency between the recoverable amount and the carrying amount of a cash-generating unit); and (Recommendation 3)
• should not provide any further guidance on the application of IAS 36. (Recommendation 4)

IASB discussion

Several IASB members agreed with the staff recommendations. Many IASB members welcomed the clarification by the staff that Recommendation 3 is an explanation and not guidance and did not think it was necessary to vote on the basis of conclusions. However, one IASB member mentioned that it was necessary to vote as this would confirm that no guidance is being added to the standard.

IASB decisions

All IASB members voted in favour of the staff recommendations.

Disclosures proposed in ED (Agenda Paper 9C)

This paper outlined the staff’s analysis and detailed recommendations on the disclosure requirements proposed in the ED.

IASB discussion

The staff outlined the proposed disclosures in six sections as follows:

• The overall disclosure objective (Recommendation 1)
• Level of aggregation and disaggregation (Recommendation 2)
• Disclosures about financial performance (Recommendation 3)
• Disclosures about financial position—maturity analysis, risk, uncertainty and discount rate (Recommendation 4)
• Reconciliation (Recommendation 5)
• Regulatory assets and regulatory liabilities measured applying paragraph 61 of the ED (Recommendation 6)

Two IASB members agreed with Recommendation 2 but expressed concern around the wording describing the level of aggregation used in other information provided to users. The concern is that information provided may be too detailed or too aggregated because it is intended for a different audience. Two IASB members suggested that the examples and wording used on the level of aggregation and disaggregation should align to the principles set out in IFRS 18 to ensure that both standards are consistent with each other. One IASB member mentioned that examples demonstrating consistency with the level of disaggregation across all areas of the financial statements would be useful.

Several IASB members expressed difficulty in separating Recommendations 3-5 as these are merely different ways of presenting the same information. The reconciliation covers all components of the recommendations and could be the way that users present information without having a disclosure overload and overlap. The staff conceded that there could be a better way of drafting these disclosure requirements.

Some IASB members commented on Recommendation 3, specifically on paragraph 50 (c) and (d) as drafted in the ED. In the IASB member’s view the disclosure requirement does not need to explicitly permit the aggregation of amounts and users should have the discretion to apply the general principles in IFRS 18 in this regard.

One IASB member mentioned that the reconciliation is incremental to Recommendation 3 but not the same and did not agree with paragraph 85(d) as drafted in the ED. Another IASB member expressed that keeping the requirements in is key.

One IASB member raised a question around the disclosure requirements proposed being disproportionate in terms of the volume of requirements which could become quite burdensome to the preparers of financial statements. Other members agreed while some thought that the disclosure was necessary especially if rate-regulated activities are key. However, this needs to be commensurate with the cost.

IASB decisions

All IASB members voted in favour of the Recommendations 1 and 2.

For Recommendation 3:

• 13 of the 14 IASB members present voted in favour of paragraph 50(a)-(b) in the ED.
• All IASB members voted against paragraph 50(c)-(d) in the ED.
• 8 IASB members present voted in favour of paragraph 50(e) in the ED.

13 IASB members voted in favour of the Recommendations 4-6.

New disclosures (Agenda Paper 9D)

This paper set out the staff analysis and detailed recommendations on new disclosure requirements arising from the IASB’s redeliberation’s on the ED.

IASB discussion

The staff outlined the proposed disclosures in four sections as follows:

• Direct (no direct) relationship concept (Recommendation 1)
• Unrecognised regulatory assets and unrecognised regulatory liabilities (Recommendation 2)
• Long-term performance incentives (Recommendation 3)
• Regulatory returns on an asset not yet available for use (Recommendation 4)

One IASB member expressed concern that the concept is too broad, which means that for those with an indirect relationship additional disclosures would be required beyond what the specific disclosure would entail.

One IASB member had difficulties with the requirement for entities not to disclose their regulatory capital base as it would be difficult to explain the direct/indirect relationship with property, plant and equipment if this is not disclosed. The staff responded that entities will make a judgement to decide whether they have a direct/indirect relationship. This was not covered in the ED. Therefore, the staff recommended the new specific disclosure requirement, which is qualitative in nature.

One IASB member agreed with paragraph 19(a) but not with paragraph 19(b) in the ED. Several other IASB members disagreed with this opinion because determining whether there is a direct/indirect relationship is pivotal to the accounting treatment and what ends up in the financial statements. Paragraph 19(b) simply explains this further. Some IASB members had concerns with how paragraphs 19(a)-(b) were drafted as these could be interpreted differently. Namely, the term “relationship” in the disclosure objective in paragraph 19(a) could be interpreted broadly to cover both direct and indirect relationships which was not intended. The staff agreed to reconsider the drafting.

Several IASB members raised the following concerns in relation to Recommendation 2, specifically on paragraph 29(a)-(c):

• The cost is higher than the benefit of these requirements.
• It is unclear how the requirements would be used to assist users.
• Users who are interested in this information have other ways of accessing this information. Therefore, there is no risk of an information gap if these are not included in the financial statements.

The staff summarised these comments as a general concern with the specificity of information. However, they saw a consensus on having some level of qualitative disclosure on the nature of unrecognised regulatory assets and liabilities.  IASB members instructed the staff to draft the standard to encompass this.

Some IASB members expressed concerns around the cost versus benefit aspect for Recommendation 4. One IASB member responded by saying that paragraph 56(a) of the ED is similar to nominal versus real and would be needed, paragraph 56(c) could be captured by the reconciliation in Agenda Paper 9C and is not required, and paragraph 56(b) did not seem relevant.

IASB decision

The vote on Recommendation 1 was taken based on agreement in principle with the recommendations pertaining to paragraph 19 and that the drafting of the specific disclosure objective would be revisited.  

• All IASB members voted in favour of paragraph 19(a)-(b) in the ED.
• 13 of the 14 IASB members voted in favour of paragraph 20 in the ED.

11 IASB members voted in favour of paragraph 29(d) in the ED, relating to Recommendation 2.

12 IASB members voted in favour of paragraph 29(a)-(c) in the ED with the condition of being redrafted as discussed, relating to Recommendation 2.

All IASB members voted in favour of Recommendation 3.

For Recommendation 4, the vote was separated as follows:

• 13 IASB members voted in favour of paragraph 56(a) in the ED

• All IASB members voted against paragraph 56(b)-(c) in the ED

Disclosures—drafting (Agenda Paper 9E)

This paper included illustrative drafting for the disclosure requirements suggested in Agenda Paper 9C and Agenda Paper 9D. The drafting was for illustration only and it may not coincide with the drafting of the disclosure section in the final standard. The staff did not seek detailed feedback on the drafting at this stage.