Pre-meeting summaries for the September IASB meeting

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11 Sep 2017

The IASB will meet at its offices in London on 20–21 September 2017. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

There are seven topics on the agenda.

Wednesday 20 September

The meeting starts with a continuation of the background sessions designed to help the Board understand dynamic risk management. This session focuses on prepayment risk and the concept of capacity (whether an entity has enough hedged items against which derivatives could be designated in a hedging relationship).

The Board will discuss three implementation projects:

  • Discussions will continue on a potential Exposure Draft to amend IAS 8 to make it easier to apply a change in accounting policy arising from an agenda decision prospectively.
  • The staff are recommending that the Board finalise its proposed amendments to IAS 19 on plan amendments, curtailment or settlement amendments, but not the proposed amendments to IFRIC 14 in relation to the availability of a refund.
  • The staff are recommending that the IASB complete the 2015-2017 Cycle of its Annual Improvements: IAS 12 the income tax consequences of dividends; IAS 23, when specific borrowing remains outstanding after completion of the asset; and IFRS 3 and IFRS 11 the initial measurement when an entity gets control of a joint operation. The IFRS 3 and IFRS 11 amendments were exposed separately, but will be completed as part of Annual Improvements. The IASB expects to issue the amendments in December 2017.

The day concludes with a continuation of the discussions on rate-regulated activities. This session focuses on initial measurement when an entity incurs costs in excess of estimates and the regulatory agreement allows the entity to recover these costs over more than one reporting period by increasing the rate charged. The question is how time value of money and an entitlement to earn a return should be taken into account when measuring the regulatory asset.

Thursday 21 September

The Board will discuss business combinations under common control, for the first time since April 2016. The purpose of the session is to give the Board a recap of previous discussions. The staff plan to bring papers back to the Board with the goal of developing a Discussion Paper for release in 2018.

The Board will be given a brief update on the research programme.

The Board will continue its discussions on primary financial statements. The staff are recommending that the Board give priority to developing an EBIT subtotal over developing a management performance measure—they plan to use the term ‘profit before financing and income tax’ rather than EBIT. The staff also recommend introducing an investing category into the statement of financial performance, although it would not be the same as the ‘investing activities’ category in the cash flow statement. The staff also think that cash and cash equivalents should be used as a proxy for cash and temporary investments of excess cash that form part of capital structure.  The papers also look at the requirement in IAS 1 to disclose expenses by nature or function.  The staff are recommending that the choice be retained but with additional disclosure. Additionally, by nature must be used when an entity is unable to allocate natural components to functions on a consistent and non-arbitrary basis.

The last agenda item is Conceptual Framework. The current draft has been undergoing a fatal flaw review. In that draft, the Basis for Conclusions alludes to the trade-off between relevance and faithful representation, but the Framework does not have an explicit principle, or any guidance on how to assess any such trade-off. This was identified as a weakness by reviewers. The staff are recommending that the Framework acknowledge the trade-off but not add any guidance on how to make that trade-off when the IASB sets Standards.

More information

Our pre-meeting summaries are available on our September meeting note page and will be supplemented with our popular meeting notes after the meeting.

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