The Board will discuss the following:

• Post-implementation review of IFRS 9: Impairments
• Financial instruments with characteristics of equity
• Second comprehensive review of the IFRS for SMEs Standard
• Rate-regulated activities
• Post-implementation review of IFRS 15: Revenue from contracts with customers

The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries, as well as observer notes from the meeting on this page as they become available.

The survey is available here on the IFRS Foundation website and should take no more than 10 minutes to complete.

The agenda for the meeting is sum­marised below:

Agenda papers from this meeting are available on the IASB's website.

Background 

When their parent applies IFRS Accounting Standards, subsidiaries apply the recognition and measurement requirements in IFRS Accounting Standards when reporting to their parent for consolidation purposes.

As part of the 2015 agenda consultation, the IASB received feedback that some of these subsidiaries would prefer to prepare their own financial statements by applying IFRS Accounting Standards with reduced disclosure requirements. The IASB acknowledged that the International Financial Reporting Standard for Small and Medium-sized Entities IFRS for SMEs standard) is unattractive for these subsidiaries because its recognition and measurement requirements differ from those in IFRS Accounting Standards. Thereby, a subsidiary applying the IFRS for SMEs standard would be required to maintain additional accounting records.

To address this issue, the IASB decided to initiate a project that would analyse adaptations required to the disclosure requirements of the IFRS for SMEs and possibly develop a reduced disclosure IFRS that would allow eligible subsidiaries to apply, in principle, the recognition and measurement requirements of full IFRSs and the disclosure requirements of the IFRS for SMEs with minimal tailoring of those disclosure requirements. As part of this project, the IASB published an exposure draft (ED) titled Subsidiaries without Public Accountability: Disclosures in July 2021. The ED proposed to eliminate disclosures that are not targeted to the needs of users of financial statements of entities that do not have public accountability.

The IASB has now finalised this project by publishing IFRS 19.

Objective 

IFRS 19 specifies the disclosure requirements an entity is permitted to apply instead of the disclosure requirements in other IFRS Accounting Standards. 

Scope 

An entity is only permitted to apply IFRS 19 when:

• it is a subsidiary
• it does not have public accountability, and
• its ultimate or any intermediate parent produces consolidated financial statements available for public use that comply with IFRS Accounting Standards.

A subsidiary has public accountability if:

• its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets), or
• it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (for example, banks, credit unions, insurance companies, securities brokers/ dealers, mutual funds and investment banks often meet this second criterion).

Eligible entities can, but are not required to, apply IFRS 19 in its consolidated, separate or individual financial statements. 

The reduced disclosure requirements 

The disclosure requirements in IFRS 19 are a reduced version of the disclosure requirements set out in other IFRS Accounting Standards. 

IFRS 19 is a disclosure-only standard. An eligible subsidiary that applies IFRS 19 is required to apply the requirements in other IFRS Accounting Standards for recognition, measurement and presentation requirements. For disclosure requirements, it applies IFRS 19 instead of the disclosure requirements in other IFRS Accounting Standards, except in specified circumstances.

In accordance with IFRS 18 Presentation and Disclosure in Financial Statements, an entity applying IFRS 19 is not required to provide a specific disclosure required by IFRS 19 if the information resulting from that disclosure would not be material.

An entity is required to consider whether to provide additional disclosures when compliance with the specific requirements in IFRS 19 is insufficient to enable users of financial statements to understand the effect of transactions and other events and conditions on the entity’s financial position and financial performance.

Effective date and transition 

IFRS 19 is effective for reporting periods beginning on or after 1 January 2027. Earlier application is permitted. If an entity chooses to apply IFRS 19 earlier, it is required to disclose that fact. If an entity applies IFRS 19 in the current reporting period but not in the immediately preceding period, it is required to provide comparative information (that is, information for the preceding period) for all amounts reported in the current period’s financial statements, unless IFRS 19 or another IFRS Accounting Standard permits or requires otherwise. 

An entity that elects to apply IFRS 19 for a reporting period earlier than the reporting period in which it first applies IFRS 18 is required to apply a modified set of disclosure requirements set out in an appendix to IFRS 19. 

Catch-up exposure draft 

In developing IFRS 19, the IASB took into account disclosure requirements in IFRS Accounting Standards as at 28 February 2021. Disclosure requirements in standards that have been added or amended subsequent to that date have been included unchanged. Subsidiaries applying IFRS 19 will therefore need to provide all the disclosures required by these new or amended IFRSs. The IASB will publish a ‘catch-up’ exposure draft of proposed amendments to IFRS 19 on disclosure requirements added to, or amended in, IFRS Accounting Standards between 28 February 2021 and May 2024. The catch-up exposure draft is expected to be published in Q3 of 2024.

Additional information 

Website of the IFRS Foundation:

• Press release
• Project summary and feedback statement
• Effects analysis
• Access to the standard (subscription required)
• Access to the basis for conclusions (subscription required)
• Guidance for developing and drafting disclosure requirements in IFRS Accounting Standards

IAS Plus:

• Summary of IFRS 19 Subsidiaries without Public Accountability: Disclosures
• Overview of the project history

Background

In June 2023, the IFRS Interpretations Committee (IFRS IC) discussed a request about applying IFRS 9 to physical delivery contracts to buy renewable energy. The IFRS IC concluded that the principles and requirements in IFRS 9 do not provide an adequate basis for an entity to determine the required accounting for some physical power purchase agreements in a consistent way. The IFRS IC specifically considered contracts for the purchase of a non-financial item when the underlying non-financial item cannot be stored and has to either be consumed or sold within a short time in accordance with the market structure in which the item is bought and sold.

The IFRS IC therefore recommended that the IASB consider undertaking a narrow-scope standard-setting project that addresses the application of the ‘own use’ exception in IFRS 9 to such agreements. Outreach confirmed that similar questions arise regarding the accounting for virtual power purchase agreements.

The IASB took up a project and decided to propose amendments to IFRS 9 and IFRS 7 for contracts to buy or sell renewable electricity that have specified characteristics.

Suggested changes

The proposed amendments in exposure draft IASB/ED/2024/3 Contracts for Renewable Electricity (Proposed amendments to IFRS 9 and IFRS 7) are:

Proposed amendments to IFRS 9

The IASB proposes to amend:

• the own-use requirements in IFRS 9 to include the factors an entity is required to consider when applying IFRS 9:2.4 to contracts to buy and take delivery of renewable electricity for which the source of production of the electricity is nature-dependent and the purchaser is exposed to substantially all of the volume risk; and
• the hedge accounting requirements in IFRS 9 to permit an entity using a contract for renewable electricity with specified characteristics as a hedging instrument:
  • to designate a variable volume of forecast electricity transactions as the hedged item if specified criteria are met; and
  • to measure the hedged item using the same volume assumptions as those used for the hedging instrument.

Proposed amendments to IFRS 7 and IFRS 19

The IASB proposes to amend IFRS 7 and the forthcoming IFRS 19 Subsidiaries without Public Accountability: Disclosures to introduce disclosure requirements about contracts for renewable electricity with specified characteristics.

Comments on the proposed changes are requested by 7 August 2024.

Note: In an additional meeting on 21 March 2024, the Due Process Oversight Committee discussed a possible shortened comment period for the exposure draft in view of the urgency of the matter and agreed to a comment period of 90 days.

Effective date and transition

The exposure draft does not specify an effective date for the amendments but asks respondents whether an effective date for annual reporting periods beginning on or after 1 January 2025 would be appropriate — early application of the proposed amendments would be permitted from the date the amendments are issued. Entities would be required to apply the amendments to the own-use requirements in IFRS 9 using a modified retrospective approach and the amendments to the hedge accounting requirements prospectively.

Alternative views

Two IASB members voted against the publication of the exposure draft. In particular, these IASB members are of the opinion that:

• fair value accounting is appropriate (i.e. no exception should be introduced) if the purchaser of renewable electricity knows with reasonable certainty that for some periods during the contract the electricity delivered under the contract will not be used, but instead will be sold;
• the proposed amendments raises questions the accounting for other electricity contracts and contracts for other non-financial items, and appears more lenient towards contracts for renewable electricity; and
• if the IASB believes that the recognition of changes in fair value of contracts for renewable electricity with particular characteristics in profit or loss does not provide useful information, this  should have been addressed through presentation.

One of these IASB members also disagreed with the scope of the amendments to hedge accounting. In this member’s opinion, there is no principle-based reason as to why an entity should be allowed to designate the variable nominal amount of a contract for renewable electricity in a hedging relationship, whilst being prevented to do so for other contracts with similar economics.

Additional information

Please click for:

• IASB press release
• Access to the exposure draft on the IFRS Foundation website
• Our IAS Plus project page on Power purchase agreements
• iGAAP in Focus newsletter explaining the proposals

In the first webcast, IASB Members Nick Anderson and Bertrand Perrin, together with IASB Technical Staff Dehao Fang, discuss the proposals to improve disclosures on business combinations. They also talk about how the proposals could strike a balance between the benefits of the information and the costs of disclosing them.

Please click to access the webcast (approx. 21 minutes) on the IFRS Foundation website.

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries, as well as observer notes from the meeting on this page as they become available.

IFRS S1 sets out overall requirements with the objective to require an entity to disclose information about its sustainability-related risks and opportunities that is useful to the primary users of general purpose financial reports in making decisions relating to providing resources to the entity.

IFRS S2 sets out the requirements for identifying, measuring and disclosing information about climate-related risks and opportunities that is useful to primary users of general purpose financial reports in making decisions relating to providing resources to the entity.

Please click to access the following Simplified Chinese translations on the IFRS Foundation website:

• IFRS S1
• IFRS S2
• Accompanying Guidance on IFRS S1
• Accompanying Guidance on IFRS S2
• Consolidated Industry-based Guidance for IFRS S2
• Basis for Conclusions on IFRS S1
• Basis for Conclusions on IFRS S2

A summary of the agenda is set out below:

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

The proposed Korean Sustainability Disclosure Standards would comprise two mandatory disclosure standards (KSSB 1 and KSSB 2) and one non-mandatory disclosure standard (KSSB 101):

• KSSB 1 General Requirements for Disclosure of Sustainability-related Financial Information is based on IFRS S1
• KSSB 2 Climate-related Disclosure is based on IFRS S2
• KSSB 101 Additional Disclosure aligned with Policy Objectives is a country-specific standard that allows entities to selectively disclose additional sustainability-related information as required by domestic laws or to meet the sustainability-related policy objectives

The timeline within the legal framework or listing rules will be determined by the Korean government following extensive consultation with domestic stakeholders. Consequently, the effective dates of the standards and the specific location for information will be established in conjunction with the development of the mandatory sustainability disclosure system.

For more information, please see the press release on the KSSB website.