IFRS 3 — Scope of post-implementation review

Date recorded:

At the July 2013 meeting, the Board discussed the Post-implementation Review (PIR) of IFRS 3 Business Combinations. In particular it discussed the activities to be undertaken during Phase I of the PIR and their corresponding expected timing, with the aim of identifying the main implementation problems encountered by entities when applying IFRS 3. At that meeting the Board also discussed the staff’s initial assessment of the areas in which the implementation of IFRS 3 may have been challenging. 

The Trustees added PIRs as a mandatory step to the Board’s due process requirements in 2007. These requirements were updated in the revised Due Process Handbook (‘the Handbook’), published in February 2013. The Handbook states that the PIRs “must consider the issues that were important or contentious during the development of the publication (which should be identifiable from the Basis for Conclusions, Project Summary, Feedback Statement and Effect Analysis of the relevant Standard), as well as issues that have come to the attention of the Board after the document was published.” The Handbook also states that a PIR “normally begins after the new requirements have been applied internationally for two years, which is generally about 30 to 36 months after the effective date” and that each review has two phases:

  • the first involves an initial identification and assessment of the matters to be examined, which are then the subject of a public consultation by the Board in the form of a Request for Information.
  • the second phase is where the Board considers the comments it has received from the Request for Information along with the information it has gathered through other consultative activities.

On the basis of that information, the Board presents its findings and sets out the steps it plans to take, if any, as a result of the review.

Staff presented the timeline for the PIR of IFRS 3 and the consultation activities within phase 1. Staff mentioned their next step will be to bring the results of the consultation and activities undertaken in Phase 1 to the Board’s November meeting, where they will also propose the scope of Phase 1 of the PIR to the Board.

Staff presented to the Committee their list of areas to consider during Phase 1 of the PIR of IFRS 3 and asked the Committee for any additional feedback on the issues they noted. Staff also requested any additional issues or comments the Committee had.

A member suggested the paper should focus on providing clarification on the purpose and the outcome of the document. They highlighted that the issues discussed within paragraph 18 d and e arise from the original implementation of IFRS 3, whereas in comparison the issues discussed under paragraph b and c are on-going issues. Therefore, members suggested staff should sort the issues by those that are principle based and those that are guidance based.

In addition, the paper should include views of major firms and prepares of the financial stats as well as the interactions of IFRS 3 with IAS 12, taxes and goodwill.

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