Financial Instruments with Characteristics of Equity: The Board discussed potential disclosures that could be developed as part of the FICE project. The Board also discussed the classification of particular financial instruments that contain obligations that arise only on liquidation of the entity, which IAS 32:16 classifies as equity. The 2018 DP proposed that at least some of these instruments should be classified as financial liabilities. The Board agreed with the staff that the information needs of users of financial statements could be met by supplementing the existing IAS 32 classification requirements with new presentation and disclosure requirements rather than changing the classification.

Management Commentary: The Board considered several issues identified during the drafting of the ED for the revised Practice Statement, mainly as a result of feedback from reviewers: (a) the status of the Practice Statement and how it compares to the status of the Materiality Practice Statement; (b) materiality—the staff recommended that the Practice Statement definition of material information should refer to the decision investors and creditors make on the basis of the management commentary and the related financial statements; (c) thresholds—clarifying why the ED uses the terms ‘key’, ‘fundamental(ly)’, ‘severely’ and ‘underpin’, and explaining how those terms relate to the materiality threshold; (d) Long-term prospects, intangible resources and relationships and ESG matters—the staff plan to restructure the appendix by providing a more summarised description of applicable requirements and guidance.

Extractive Activities: The Board had a non-decision making session in which the staff explained the life cycle of a minerals and oil and gas property, the activities that are performed in the different phases of that life cycle, and the financial reporting challenges associated with those different phases. Board members were concerned about the diversity in accounting practices for capitalisation of exploration expenditures. They want to understand if the differences in practice reflect simple policy choices or differences in the underlying activities. Several Board members observed that many of the issues were not limited to extractive activities, but are observed in pharma and mining as well, for example.

Agenda Consultation: The Board gave the staff permission to publish the Request for Information, which will lead to the Board setting priorities for 2022 to 2026 with 120 days as a comment period. This is shorter than the normal 180 days previously provided, because commenting on a strategic consultation should require less time for respondents.

Disclosure Initiative—Subsidiaries that are SMEs: The Board decided to start the process for publishing the ED. It will have a comment period of 180 days.  

SME Standard review: The staff provided an oral update of most recent meeting of the SME Implementation Group. They intend to present a plan for the project direction for the second phase of the review for the Board to consider at its meeting in March. 

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.