Date recorded:

The IFRS Interpretations Committee (Committee) met on Tuesday 20 April 2021.

The Committee discussed the comment letter analyses for three tentative agenda decisions:

IAS 19 Employee Benefits—Attributing Benefit to Periods of Service: In December 2020, the Committee discussed the periods of service to which an entity attributes the benefit for a defined benefit plan when the amount of the retirement benefit to which an employee is entitled depends on the length of service before retirement. The Committee concluded that the entity attributes the period of service to only the last 16 years of employee services. A number of respondents commented that the Committee should not rule out the possibility of attributing the obligation from the date of employment applying the overarching objective in IAS 19:1.

The Committee decided to finalise the agenda decision with some suggested changes to wording. The matter will also be reported to the Board due to the complexity of IAS 19.

IAS 1 Presentation of Financial Statements—Classification of Debt with Covenants as Current or Non-current: In December 2020, the Committee discussed the informal feedback and enquiries received concerning the different interpretations arising from the application of recent amendments to IAS 1 related to the classification of liabilities. In the meeting, the Committee members generally agreed with the analysis of how an entity determines whether it has "the right to defer settlement" when a long-term liability is subject to a condition and its compliance with the condition is tested at dates after the reporting date, applying the amended IAS 1, in the three cases described. However, almost all of the respondents expressed concerns about the outcome of applying the IAS 1 amendments and suggested the matter be referred to the Board.

The Committee decided not to finalise the agenda decision at this moment but to defer the matter to the Board, particularly highlighting the new information raised by the respondents.

IFRS 9 Financial Instruments—Hedging Variability in Cash Flows due to Real Interest Rates: In December 2020, the Committee discussed whether a hedge of the variability in cash flows arising from the changes in the real interest rate could rebut the presumption in IFRS 9:B6.3.13 and be accounted for as a cash flow hedge. The Committee members generally agreed with the staff's conclusion that hedge accounting cannot be applied to the inflation swap in the fact pattern described. Half of the respondents to the tentative agenda decision did not agree with the discussion explaining that cash flow hedge accounting could not be applied. The staff analysed the reasons for the disagreement and continue to support the conclusion in the agenda decision.

The Committee decided to finalise the agenda decision with the suggested change made by the Committee members. At the same time, the matter would be reported to the Board due to the concerns raised.

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