IASB finalises amendments to IAS 1 regarding the classification of debt with covenants

31 Oct 2022

The International Accounting Standards Board (IASB) has published 'Non-current Liabilities with Covenants (Amendments to IAS 1)' to clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. The amendments are effective for reporting periods beginning on or after 1 January 2024.



In January 2020, the Board issued Classification of Liabilities as Current or Non-current, which amended IAS 1 Presentation of Financial Statements. The amendments clarified how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances. The amendments are effective for annual reporting periods beginning on or after 1 January 2023, with earlier application permitted.

In December 2020, the IFRS Interpretations Committee published a tentative agenda decision in response to informal feedback and enquiries about how an entity applies the amendments to particular fact patterns. After considering feedback to its tentative agenda decision, the Committee handed the matter over to the IASB as that feedback provided information about situations the Board did not specifically consider when developing the 2020 amendments.

In response to that new information, the Board decided to amend IAS 1 with respect to classification (as current or non-current), presentation and disclosures of liabilities for which an entity’s right to defer settlement for at least 12 months is subject to the entity complying with conditions after the reporting period.

A corresponding exposure draft was published in November 2021. After deliberating the feedback received, the IASB has now finalised the proposed amendments.


Key changes

The amendments in Non-current Liabilities with Covenants (Amendments to IAS 1)

  • Modify the requirements introduced by Classification of Liabilities as Current or Non-current on how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances: Only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months.
  • Defer the effective date of the 2020 amendments to 1 January 2024.

Three proposals the IASB included in its November 2021 exposure draft were not finalised:

  • the requirement that an entity has to present non-current liabilities with covenants separately in the statement of financial position;
  • the requirement that an entity has to disclose whether and, if so, how it expected to comply with covenants after the reporting date; and
  • the clarifications of some situations in which an entity would not have a right to defer settlement of a liability.

Feedback on the exposure draft in these cases led the IASB to conclude that the proposed amendments were not needed, too costly, or would fail to achieve their objective.


Effective date

The amendments are effective for reporting periods beginning on or after 1 January 2024. The amendments are applied retrospectively in accordance with IAS 8 and earlier application is permitted.


Additional information

The following additional information is available on the IASB website and on IAS Plus:

Supplementary ISSB meeting tomorrow

31 Oct 2022

The IFRS Foundation has just announced a supplementary meeting of the International Sustainability Standards Board (ISSB).

During the one-hour meeting, ISSB members will discuss climate resilience.

The agenda for the meeting and the paper to be discussed are available on the IFRS Foundation website.

Agenda for November 2022 GPF meeting

28 Oct 2022

Representatives from the International Accounting Standards Board (IASB) will meet with the Global Preparers Forum (GPF) in a hybrid meeting on 11 November 2022. The agenda for the joint meeting has been released.

The full agenda for the meeting is sum­marised below:

Friday, 11 November 2022 (10:00-17:15)

  • Welcome and introductions
  • IAS 37 Provisions, Contingent Liabilities and Contingent Assets (discount rates)
    • Whether the discount rate should reflect the company’s own credit risk
    • Disclosure of information about discount rates used
  • IFRS 9 Post-implementation review
    • Views on the experience of applying the impairment requirements in IFRS 9 Financial Instruments, as well as matters that members think the IASB should consider for the Post-implementation Review (PIR) of these requirements.
  • IFRS 15 Post-im­ple­men­ta­tion review
    • Identify issues that need to be discussed further in a request for information
  • Primary financial statements
    • Subtotals in the statement of profit and loss — change in approach to classifying income and expenses within the financing category and aspects of the proposals for entities with specified main business activities
    • Management performance measures—rebuttable presumption and simplified method of calculating the tax effect for reconciling items
    • Disclosure of operating expenses by nature in the notes
  • Equity method
    • Input on the alternatives identified in addressing the application question: How should an investor account for gains and losses that arise from the sale of a subsidiary to its associate, applying the requirements of IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures
  • IASB and IFRS Interpretations Committee Update
  • ISSB Update

Agenda papers for this meeting are available on the IFRS Foundation's website.

October 2022 ISSB meeting notes posted

28 Oct 2022

The ISSB met in Montreal from 18-21 October. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed:

Consultation on Agenda Priorities

The staff previously stated the ISSB’s intention to publish the RFI in Q4 of 2022. Due to the need to strongly emphasise foundational activities—and the importance of IFRS S1 and IFRS S2—the staff now expect to publish an RFI in the first half of 2023. The ISSB supported focusing on the work to build on the foundation established by IFRS S1 and IFRS S2, once finalised, and new research and standard-setting for stakeholder input to inform the IASB’s decisions on the future work plan.

General Sustainability-related Disclosures

This was the first decision-making session of the ISSB in relation to the exposure drafts (EDs). The IASB confirmed that information is provided to meet the information needs of the primary users of general purpose financial reporting who are “existing and potential investors, lenders and other creditors”, in alignment with the IASB’s Conceptual Framework and decided to remove “enterprise value” from the objective and from the definition of materiality which would create alignment with the IASB’s Conceptual Framework but not fundamentally change the focus of the required disclosures. Additional resources and language would clarify the concept of enterprise value and the scope of sustainability-related financial information required. The ISSB also decided to introduce a requirement to disclose the process of identifying and disclosing material information and/or materiality judgments and  decided not to use the term “significant”.

Climate-related Disclosures

The ISSB confirmed the requirements for an entity to disclose: its absolute gross Scope 1 and Scope 2 greenhouse gas (GHG) emissions generated during the reporting period, including separate disclosure for the consolidated accounting group and unconsolidated investees; and its Scope 3 GHG emissions, considering the 15 Scope 3 GHG emissions categories described in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The ISSB will consider ways to help entities meet the Scope 3 disclosure requirements, such as deferring the effective date for this disclosure or developing additional guidance. The ISSB decided to proceed with the proposal that entities use the GHG Protocol Corporate Standard. However, entities that have been using a different measurement method would be permitted to do so during a transition period, or while a jurisdiction requires use of that other method.

General Sustainability-related Disclosures and Climate-related Disclosures

The ISSB decided to make some drafting changes that the staff think would improve the interoperability with proposals published in Europe and the US. The ISSB confirmed the use of the TCFD pillars for structuring the core content in IFRS S1 and IFRS S2 and confirm the meaning of the global baseline. In addition to the recommendations in the other papers, the ISSB decided to confirm that time horizons not be defined for short, medium and long term; that disclosures be required about the effects of climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows for the reporting period (i.e. the current effects); that disclosures are not required to be reported separately for physical risks, transition risks and climate-related opportunities; that separate disclosures be required about assets subject to physical and transition risks and climate-related opportunities, in the form of metrics; the disclosures proposed in relation to climate resilience; to add a requirement to disclose whether and how an entity uses climate-related scenario analysis to inform the identification of climate-related risks and opportunities; and use the term “carbon credit” instead of “carbon offset”.

Industry-based Materials

The ISSB will begin alignment around the strategy for integrating industry-based materials into IFRS Sustainability Disclosure Standards, including the role of the SASB Standards in [draft] IFRS S1, the industry-based requirements in Appendix B of [draft] IFRS S2, improving the international applicability of the SASB Standards, the ISSB’s upcoming consultation on agenda priorities and advancing SASB projects inherited by the ISSB. All ISSB members supported that IFRS S2 should maintain the requirement that entities provide industry-specific disclosures. They also supported that the ISSB classify the content in Appendix B as illustrative examples, while stating the intention to make Appendix B mandatory in the future, subject to further consultation.

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

October 2022 IASB meeting notes posted

28 Oct 2022

The IASB met in London on 18-20 October 2022. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed:

Rate-regulated Activities

The IASB decided that the final Accounting Standard retains the definition of allowable expense proposed in the ED, clarifies that a regulatory agreement may determine the amount that compensates for an allowable expense using the same or a different basis from the basis an entity uses for measuring the allowable expense in accordance with IFRS Accounting Standards; and clarifies the treatment of allowable expenses based on benchmarks and includes examples to help entities identify differences in timing in those cases. The IASB also decided that the final Accounting Standard retain the proposals in the ED for entities to account for regulatory assets or regulatory liabilities arising from differences between the regulatory recovery period and assets’ useful lives when there is a direct relationship between an entity’s regulatory capital base and its property, plant and equipment; provides guidance to help entities determine when there is no direct relationship between their regulatory capital base and their property, plant and equipment; and requires entities that have concluded there is no direct relationship between their regulatory capital base and their property, plant and equipment to provide disclosures to enable users of financial statements to understand the reasons for their conclusion.

Contractual Cash Flow Characteristics

The IASB decided that IFRS 7 be amended to require disclosure of, for each class of financial assets and financial liabilities not measured at fair value through profit or loss, a qualitative description of the nature of the contingent events that could change the timing or amount of contractual cash flows; quantitative information about the potential range of changes to contractual cash flows that could result from the contractual terms; and the gross carrying amount of financial assets and amortised cost financial liabilities subject to these contractual terms. The effective date would be set after the proposals have been exposed.

Equity Method

The purpose of this meeting was to review the progress of the equity method research project. The staff acknowledged that developing solutions to the application questions has taken longer than anticipated, but they still think it is possible to develop solutions. The IASB decided to continue the research project with its current objective and approach. 

IFRS Taxonomy

The IASB decided to shorten the comment period to 30 days for the Proposed IFRS Accounting Taxonomy Update for Lease Liability in a Sale and Leaseback and Non-current Liabilities with Covenants

Maintenance and consistent application

The IASB has on its work plan a project to make three targeted improvements to IAS 37, including one in relation to the discount rate an entity applies in measuring a provision. The IASB is considering developing proposals to specify in IAS 37 whether that rate should reflect its own performance risk. The staff are gathering information to help the IASB reach a tentative decision on this question at a future meeting. In addition, no IASB members objected to the publication of three IFRS Interpretations Committee agenda decisions: Multi-currency Groups of Insurance Contracts (IFRS 17 and IAS 21); Special Purpose Acquisition Companies (SPAC)—Accounting for Warrants at Acquisition; and Lessor Forgiveness of Lease Payments (IFRS 9 and IFRS 16).

Disclosure Initiative—Targeted Standards-level Review of Disclosures

The IASB decided to develop a middle ground approach to drafting disclosure requirements with the aim of providing a better framework for entities to use judgement to identify and disclose useful information to users of financial statements. Applying such an approach, disclosure objectives would be accompanied by a prescriptive list of items of information that an entity should disclose to meet the objectives. The IASB decided to publish the Guidance for the Board as a document posted on the IFRS Foundation website. Furthermore, the IASB decided not to proceed with any further work on the disclosure requirements in IFRS 13 and IAS 19.

Post-implementation Review (PIR) of IFRS 9—Classification and Measurement

The staff are not recommending any changes to the requirements in IFRS 9. However, to increase the usefulness and transparency of information provided about the overall performance of equity investments for which the OCI presentation election was made, the staff recommend amending paragraph 11A of IFRS 7 to require disclosure of the aggregated fair value of equity investments for which the OCI presentation option is applied at the end of the reporting period and changes in fair value recognised in OCI during the period. The IASB also decided to continue to consider as part of this review the accounting for BACS transfers and to explore permitting the derecognition of financial liabilities before settlement date if specified criteria are met. The staff plan to bring a paper back in November.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

In this session, the IASB discussed the objective and structure of the new standard and the approach to developing disclosure requirements. The IASB agreed with all of the staff recommendations.

Goodwill and Impairment

The purpose of this meeting is to initiate the IASB’s discussion on the subsequent accounting for goodwill. The IASB will not be asked to make any decisions at this meeting. The staff reminded the IASB of its preliminary decision to retain the impairment-only model for the subsequent accounting of goodwill. The staff also provided an overview of respondents’ feedback on the Discussion Paper (DP) and a summary of additional information and recent developments since the feedback on the DP. No decisions were made, but the IASB indicated that it has sufficient information to be in a position to make a decision at a future meeting.

ISSB Update

The ISSB Chair gave an overview of the first meetings of the ISSB, including this week’s meeting and decisions made to date. The ISSB Chair reiterated the importance of building a global baseline for sustainability reporting and therefore, the ISSB is working closely with the European Financial Reporting Advisory Group (EFRAG) who is currently developing European Sustainability Reporting Standards (ESRS). He also listed the various consultative groups that have been established over the last few months to inform the standard-setting process of the ISSB.

An analysis of how the IASB’s work plan has changed as a result of the meeting is available here.

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

ESMA announces enforcement priorities for 2022 financial statements

28 Oct 2022

The European Securities and Markets Authority (ESMA) has announced the priority issues that the assessment of listed companies' 2022 financial statements will focus on. A special focus is on Russia’s invasion of Ukraine and climate-related disclosures.

The common enforcement priorities related to 2022 IFRS financial statements include:

  • Climate-related matters
  • Russia’s invasion of Ukraine
  • Macroeconomic environment

In addition, the following topics will come under investigation:

  • Taxonomy-related disclosures
  • Reporting scope and data quality
  • Identification of APMs and reconciliations
  • Block tagging on ESEF

Please click for the public statement on enforcement priorities on the ESMA website, providing more background on each of the focus areas.

ISSB appoints Special Advisor to the ISSB Chair

27 Oct 2022

The ISSB has appointed Ken Shibusawa as special adviser to the Chair. In this role, Mr Shibusawa will provide strategic counsel to the ISSB Chair with specific focus on jurisdictional matters in relation to the adoption of IFRS Sustainability Disclosure Standards in Japan.

For more information, see the press release on the IFRS Foundation website.

Agenda for the November 2022 Islamic Finance Consultative Group meeting

26 Oct 2022

An agenda has been released for the meeting of the Islamic Finance Consultative Group that will be held virtually and in Kuala Lumpur, Malaysia on 1-2 November 2022.

A summary of the agenda is set out below:

Tuesday 1 November 2022 (09:00-17:00)

  • Updates from MASB
    • Standard-setting activities and due process
    • Research projects
    • Implementation
  • Updates from IASB
    • Exposure Draft third edition of the IFRS for SMEs Accounting Standard
    • Post-implementation review of IFRS 9
    • Post-implementation review of IFRS 15
  • Update from IFRS Foundation on ISSB developments and its agenda priorities consultation

Wednesday 2 November 2022 (09:30-12:55)

  • IASB’s Third Agenda Consultation
  • IFRS Interpretations Committee update
  • Evolution of Islamic Finance in Malaysia
    • Value-based intermediation: Reinforcing sustainability agenda
    • Ta’awun in Takaful: Enhancing broader socioeconomic resilience
    • Islamic fintech: Digital banking and financial inclusion

Agenda papers for the meeting are available on the IFRS Foundation website.

IASB issues podcast on latest Board developments (October 2022)

26 Oct 2022

The IASB has released a podcast featuring IASB Chair Andreas Barckow and Executive Technical Director Nili Shah discussing deliberations at the October 2022 IASB meeting.

High­lights of the podcast include dis­cus­sions on the following projects: 

  • Two disclosure initiatives projects on targeted Standards-level review of disclosures and subsidiaries without public accountability;
  • Rate-regulated activities;
  • Accounting for goodwill;
  • Equity method;
  • Post-implementation review of IFRS 9 — Classification and measurement;
  • Three agenda decisions from the IFRS Interpretation Committee;
  • Proposed taxonomy update.

The podcast can be accessed through the press release on the IFRS Foundation’s website.

Please click to view the detailed notes taken by Deloitte observers for the IASB meeting.

Summary of the ISSB jurisdictional working group September 2022 meeting

26 Oct 2022

The ISSB jurisdictional working group held its meeting on 19 September 2022. A summary of the meeting is now available.

During the meeting, par­tic­i­pants the ongoing bilateral discussions between the ISSB and the European Union as well as the ISSB’s September 2022 Board Papers. See the meeting summary on the IFRS Foundation's website.

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