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IFRS 7 — Applicability of the amendments to IFRS 7 on offsetting financial assets and financial liabilities to condensed interim financial statements

Date recorded:

The Committee discussed a request for guidance on the applicability of the amendments to IFRS 7 Disclosure – Offsetting Financial Assets and Financial Liabilities (‘IFRS 7 Amendments’) issued in December 2011 to condensed interim financial statements.

Specifically, the submitter questioned whether the additional disclosure requirements in the IFRS 7 Amendments should be included in condensed interim financial statements prepared in accordance with IAS 34 Interim Financial Reporting – citing the addition of paragraph 44R to IFRS 7 which notes that the disclosure requirements in the IFRS 7 Amendments are applicable for annual periods beginning on or after 1 January 2013 and interim periods within those annual periods.

Three unique views were considered in relation to scope of these disclosures in interim financial statements:

  1. View A: The additional disclosures not required in condensed interim financial statements given that no consequential amendment was made to IAS 34 in relation to these amendments.
  2. View B: The additional disclosures are required in all future sets of condensed interim financial statements for a period beginning on or after 1 January 2013.
  3. View C: The additional disclosures are required only in the condensed set of financial statements for an interim period during the year of adoption of the amendments (and not for all periods thereafter).

Committee member preferences were primarily influenced by their belief of the IASB’s intention in issuing the IFRS 7 Amendments.

Specifically, several Committee members expressed support for View B on the basis that they believed the disclosures were originally provided as a result of requests from users of financial statements to provide information to enable them to compare statements of financial position prepared in accordance with IFRSs with those prepared in accordance with U.S. GAAP. Therefore, they saw such disclosures as necessary in all future sets of interim financial statements to allow users to assess comparability.

However, other Committee members did not support View B on the basis that no disclosure requirements had been specified in IAS 34 (ultimately expressing support for either View A or View C). While they acknowledged general requirements in IAS 34 to provide an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the entity since the end of the last annual reporting period, they believed a specific disclosure requirement should have been reflected in IAS 34 if it was the Board’s intention to require on-going disclosure.

After a lengthy debate, Committee members acknowledged that all views could be supported (View A on the basis of a lack of amendment in IAS 34, View B on the basis of the language provided in the IFRS 7 Amendments and View C on the basis of language in paragraph 44R of IFRS 7), and therefore, it was necessary to understand the IASB’s intention in drafting the amendments. Therefore, the Committee Chair directed the staff to take this issue to the Board to understand its original intentions.

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