The purpose of the session was to obtain feedback from academics on the proposals in the December 2019 ED and to discuss relevant academic evidence.

A recording of the research seminar is now available on the IASB website.

Question 16 of the EC consultation had asked: "Do you see any further areas in existing financial accounting rules (based on the IFRS framework) which may hamper the adequate and timely recognition and consistent measurement of climate and environmental risks?" Possible answers to choose from had included "impairment and depreciation", "provisions", "contingent liabilities" and "other".

In its response, ESMA writes:

Similarly, the EBA response to the consultation states:

Deloitte supports this stance. In our comment letter, we state: "Existing financial accounting requirements do not in our view hamper the adequate and timely consideration of climate and environmental risks in the recognition and measurement of assets and liabilities of entities in their financial statements."

Please click to access the following additional information:

• Consultation page on the EC website
• ESMA response to the consultation (ESMA website)
• EBA response to the consultation (EBA website)

Par­tic­i­pants at the meeting, which was chaired by IASB member Darrel Scott, discussed business combinations, IFRS 17, applying IFRS Standards in 2020 and the impact of COVID-19, comprehensive review of the IFRS for SMEs Standard, primary financial statements, management commentary, and an update on IASB projects.

Please click for access to the full report on the IASB website.

Disclosure Initiative: Accounting Policies: In August 2019, the Board published the Exposure Draft (ED) Disclosure of Accounting Policies, which proposed amendments to IAS 1 and IFRS Practice Statement 2. At this meeting the staff recommend that the IASB amend the transition requirements to require entities to disclose material accounting policy information for the current period and disclose comparative accounting policy information if, applying IAS 1:38, it is relevant to understanding the current period’s financial statements. They also recommend that the amendments apply to annual reporting periods beginning on or after 1 January 2023 with early application permitted and that the effective date of the amendments to IAS 8 resulting from the Accounting Policies and Accounting Estimates project be changed to the same date.

Management Commentary: The Board will discuss potential guidance on reporting financial resources. The papers discuss requirements and possible supporting guidance on reporting progress in managing key matters, a disclosure objective for performance and position; and possible guidance supporting that objective, including on identifying key facets of performance and position that need to be addressed in management commentary. They also discuss measures and indicators.

Extractive activities: The staff papers summarise their assessment on how activities within the scope of IFRS 6 would be accounted for in the absence of that Standard, applying the requirements in IAS 16 and IAS 38.

The staff concluded that costs incurred during the exploration phases would not meet the requirements of IAS 16 or IAS 38 for recognition as an asset. The staff also assessed expenditure acquiring the legal rights from a third party and concluded that it could meet the definition of an intangible asset and the recognition criteria, but that application of IAS 36 without the specific requirements in IFRS 6:18-22 would generally lead to an immediate write‑off of exploration and evaluation assets. Applying the guidance in IAS 38:54-55, exploration and evaluation expenditure incurred subsequent to the acquisition of the legal right would be recognised as an expense as it is incurred.

Maintenance and Consistent Application - Lack of exchangeability: In April the IASB decided on how to amend IAS 21 to address the accounting when the spot exchange rate is not observable (because of a lack of exchangeability between two currencies). At this meeting the staff are recommending that the proposed changes be applied prospectively. They also recommend that the ED be open for comment for 120 days.

IBOR Reform and the Effects on Financial Reporting: The IASB will discuss feedback on the proposals for qualifying hedging relationships and groups of items. The staff recommend that the IASB permit, rather than require, entities to reset cumulative fair values to zero for the purpose of performing the retrospective effectiveness assessment as proposed in paragraph 102S of the ED and confirm the proposals in the ED related to the accounting for qualifying hedging relationships subject clarifications and drafting suggestions as explained in the staff analysis. That completes the deliberations and, if the IASB agrees, the staff expect to finalise the amendments.

IFRS Taxonomy: The staff will report on plans to update the IFRS Taxonomy for the COVID-19-Related amendments to IFRS 16. There is no paper for this session.

More information

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

The purpose of the session is to obtain feedback from academics on the proposals in the December 2019 ED and to discuss relevant academic evidence.

The proposed update includes elements to reflect

• amendments to the new and old insurance contracts Standard, IFRS 17 and IFRS 4, issued in June 2020; and
• amendments to IAS 16 regarding proceeds before the intended use issued in May 2020.

For more information, see the press release and proposed update on the IASB’s website. Comments are requested by 14 September 2020.

Background

On 23 January 2020, the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1) providing a more general approach to the classification of liabilities under IAS 1 Presentation of Financial Statements based on the contractual arrangements in place at the reporting date. The amendments had an effective date of 1 January 2022.

In April 2020, the IASB held a supplementary IASB meeting to consider COVID-19-related matters including the Board's timelines in view of the COVID-19 pandemic. The Board tentatively decided to delay by one year the effective date of Classification of Liabilities as Current or Non-current (Amendments to IAS 1) to annual reporting periods beginning on or after 1 January 2023 and published a corresponding exposure draft in May 2020.

The finalised amendment published today defers the effective date of the January 2020 amendments by one year.

Changes

The changes in Classification of Liabilities as Current or Non-current — Deferral of Effective Date defer the effective date of Classification of Liabilities as Current or Non-current (Amendments to IAS 1) to annual reporting periods beginning on or after 1 January 2023. Earlier application of the January 2020 amendments continue to be permitted.

Additional information

Please click for:

• IASB press release (link to IASB website)
• IFRS in Focus newsletter explaining the amendment
• Our IAS Plus project page on Classification of liabilities — Effective date

The standards and amendments affected include: 

• IPSAS 41 Financial Instruments;
• IPSAS 42 Social Benefits;
• Long-term Interests in Associates and Joint Ventures (Amendments to IPSAS 36) and Prepayment Features with Negative Compensation (Amendments to IPSAS 41);
• Collective and Individual Services (Amendments to IPSAS 19); and
• Improvement to IPSAS, 2019. 

The exposure draft can be accessed on the IPSASB website. Comments are requested by 15 August 2020.

A consolidated version of IFRS 17 incorporating the June 2020 amendments is now available freely on the IASB website. The amendments are effective for annual periods beginning on or after 1 January 2023 with earlier application permitted.

Please click to access the consolidated version of IFRS 17 on the IASB website.

The corrections affect IFRS 17 Insurance Contracts. In addition, the IASB has published a list of errata on Amendments to IFRS 17 published in June 2020.

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors. Both, the editorial corrections and the list of errata, can be viewed on the editorial corrections page of the IASB's website.