February 2022 IASB meeting notes posted

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28 Feb 2022

The IASB met in London over four days, from Monday 21 to Thursday 24 February 2022. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed:

Dynamic Risk Management (DRM)

When developing the core model for DRM, the IASB tentatively decided that when derivatives align the asset profile with the target profile, the changes in fair value of such derivatives are recognised in other comprehensive income (OCI). Volatility in equity arising from the recognition of fair value changes in OCI was one of the three main challenges identified as key to the viability and operability of the DRM model. The staff explore two potential alternatives for the mechanics the IASB could consider for the DRM model. Both approaches aim to better reflect the risk management activities in the financial statements and address the concerns raised during outreach. The staff sought the IASB’s view on the direction of the future work, without asking the IASB to make any decisions. The Chairman’s summary of the discussions was that IASB members support moving forward with the two approaches, which will now be further explored by the staff.

Disclosure Initiative—Targeted Standards-level Review of Disclosures

The comment period for ED/2021/3 Disclosure Requirements in IFRS Standards—A Pilot Approach closed in January. The purpose of this meeting was to provide a summary of the fieldwork findings and feedback received from these stakeholders and ask the IASB if it has any questions or comments. No decisions were made.

Rate-regulated Activities

The IASB reconfirmed the proposal to require an entity to apply the final Standard to all its regulatory assets and regulatory liabilities. The ED does not specify whether a particular type of body, such as a regulator, is required for a regulatory asset or regulatory liability to exist. The IASB decided that the final Standard will include the existence of a regulator in the conditions that are necessary for a regulatory asset or regulatory liability to exist.

Financial Instruments with Characteristics of Equity

This IASB was asked to make tentative decisions on proposed clarifications related to the classification of financial instruments applying IAS 32 when payment is at the discretion of the issuer’s shareholders. The IASB decided, by a narrow majority, to include, as application guidance in IAS 32, factors that may be relevant for an entity to consider in assessing whether a decision of shareholders is within the control of the entity in classifying financial instruments as financial liabilities or equity.

Primary Financial Statements

This IASB considered the relationship between the general principle of disaggregation for the presentation of information in the primary financial statements and the requirements in IAS 1 for specific line items in those statements. The IASB supported all of the staff recommendations, except for a proposal to include in the Basis for Conclusions an analysis of the costs and benefits of requirements for specified line items.

Third Agenda Consultation

The IASB continued its discussions of the feedback received on the RfI, relating to projects on the current work plan; cross-cutting themes—capacity implications; connectivity; partnering further with national standard-setters; priority of matters identified in post-implementation reviews; and strategic direction and balance of the IASB’s activities from 2022 to 2026.

Maintenance and consistent application

Availability of a Refund (Amendments to IFRIC 14): In 2015, the IASB proposed narrow-scope amendments to IFRIC 14. The IASB decided to withdraw the project from its work plan.

Provisions—Targeted Improvements—Project review: The IASB has on its work plan a project to make targeted improvements to IAS 37. The IASB has not discussed this project for some time. The purpose of this meeting was to review the project’s prospects for progress and decide whether to keep the project on the IASB’s work plan. The IASB decided to keep the project on its work plan.

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)—Transition, effective date and due process: In December 2021, the IASB decided to proceed with its proposed amendments to IFRS 16 published in ED/2020/4 Lease Liability in a Sale and Leaseback, with some changes to the proposals. The IASB supported the staff’s recommendations with respect to the transition requirements and effective date for the amendments to IFRS 16 and to set an effective date of annual reporting periods beginning on or after 1 January 2024. One IASB member indicated his intention to dissent from the amendments.

Post-implementation Review of IFRS 10-12

The staff had identified some matters to designate as medium priority on the research agenda and to refer other matters to the IFRS Interpretations Committee. The IASB decided to give lower priority to the research agenda items and not to refer any matters to the IFRS Interpretations Committee. The IASB decided that sufficient work has been completed to conclude the PIR and for the staff to prepare the Report and Feedback Statement on the PIR.

Second Comprehensive Review of the IFRS for SMEs Standard

The IASB continued to deliberate specific sections of the IFRS for SMEs Standard that could be aligned with IFRS Accounting Standards, amendments to IFRS Accounting Standards and IFRIC Interpretations in the scope of the second comprehensive review of the IFRS for SMEs Standard: IFRS 9 Financial Instruments (Impairment of Financial Assets); IFRS 15 Revenue from Contracts with Customers; cryptocurrency; recognition and measurement of development costs; IFRS 3 Business Combinations (Definition of a Business and Reacquired Rights); and the alignment with IFRS 3, IFRS 10 and IFRS 11. The IASB supported the staff recommendations, except for the capitalisation of development costs, with the IASB supporting the capitalisation of development costs being included as an option (i.e. an accounting policy choice). There were also close votes on some issues related to impairment of financial assets and revenue from contracts with customers.

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

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