Finalisation of agenda decision—IAS 37 Provisions, Contingent Liabilities and Contingent Assets—Climate-related Commitment: In its November 2023 meeting, the IFRS IC discussed a submission asking its views on how IAS 37 applies to climate-related commitments to a fact pattern where an entity, which is a manufacturer of household products, publicly states a net-zero transition commitment. The manufacturer published a detailed plan for the modification of the manufacturing method to achieve 60% reduction in emissions in nine years and to buy carbon credits to offset its remaining emissions after those nine years. The IFRS IC concluded that whether there is a constructive obligation depends on different facts and circumstances. The present obligation and probable outflow criteria are satisfied only after nine years and thereafter as the entity emits greenhouse gases. 43 comment letters were received and most of the respondents agreed with the technical analysis in the tentative agenda decision and agreed not to recommend that the IASB consider adding a standard-setting project to the work plan. The IFRS IC decided to finalise the agenda decision and suggested changes to the drafting of the agenda decision. 

Finalisation of agenda decision—IFRS 3 Business Combinations—Payments Contingent on Continued Employment during Handover Periods: In its September 2023 meeting, the IFRS IC received a submission about how an entity accounts for payments (as part of the acquisition agreement) to the sellers of an acquired business. The payments and continued employment aim to ensure the appropriate transfer of knowledge from the sellers to the new management team. The sellers are remunerated for their services at a level comparable to other management executives, but some of the consideration for the shares is withheld until the handover is complete and is forfeited if the individual leaves employment before completion of the handover. The sellers are also entitled to additional payments that are contingent upon meeting a specified level of financial performance and the continued employment during a limited period. The IFRS IC concluded that the evidence it gathered did not indicate that there is significant diversity in the accounting treatment and entities apply the accounting described in the agenda decision published in January 2013. 11 comment letters were received and most of the respondents agreed with the technical analysis in the tentative agenda decision. The IFRS IC decided to finalise the agenda decision.

IFRS IC input to IASB projects—Post-implementation Review of IFRS 9 Financial Instruments—Impairment: IFRS IC members provided their input to the IASB’s post-implementation review (PIR) of the impairment requirements in IFRS 9—specifically, on application matters related to determining expected credit losses (ECL) for intragroup financial instruments, loan commitments, financial guarantee contracts and purchased or originated credit-impaired (POCI) financial assets.

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