The Committee will discuss the following:

• Disclosure of Revenues and Expenses for Reportable Segments (IFRS 8 Operating Segments)
• Classification of Cash Flows related to Margin Calls on 'Collateralised-to-Makret' Contracts (IAS 7 Statement of Cash Flows)
• Intangible Assets
• Business Combinations — Disclosures, Goodwill and Impairment
• Ad­min­is­tra­tive matters

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.

A summary of the agenda is set out below:

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

The technical explanations comprise of 44 items and are grouped in chapters according to their nature (general requirements and general disclosures, environment, social, governance, and XBRL and datapoints). 

The explanations are provided as part of EFRAG's role as technical advisor to the European Commission to provide a practical and timely support for preparers and others in the implementation of ESRSs. They have been added to the ESRS Q&A platform launched in October 2023 that entities can use to submit ESRS implementation questions to EFRAG.

To facilitate accessibility, EFRAG plans to publish at the end of each quarter a collection of all explanations published during the quarter.

For more information, including access to the technical explanations and the Q&A platform, please see the press release on the EFRAG website. 

The first set of technical explanations is available here.

The second set of technical explanations is available here.

According to Article 1, the standard is drafted in a way that results in high level guidance that encourages entities to practice sustainable development, standardises the disclosure of corporate sustainable development information and ensures the quality of sustainable information. The draft standard applies to entities established within the territory of the People's Republic of China that are subject to particular regulations. Entities will be allowed to voluntarily apply the draft standard.

The draft standard does not include any assurance requirements, nor does it state an effective date. However, the drafting note states that a climate standard will be published by 2027, and the full set of sustainability standards will be published by 2030.

Please click to access the draft standard via the press release (in Chinese) on the Chinese MoF website.

The following topics were discussed:

• Post-implementation review (PIR) of IFRS 9—Impairment: The IASB deliberated on the feedback received in response to its Request for Information Post-implementation Review—IFRS 9 Financial Instruments—Impairment with regard to credit risk disclosures and other matters. The IASB decided to classify as medium priority the matters related to disclosure requirements in IFRS 7 and to add to its research pipeline a project to make targeted improvements to those requirements. The IASB also decided to take no action on matters related to the simplified approach for recognising expected credit losses and the addition of illustrative examples to IFRS 9 for some types of financial instruments, such as those between related parties. Finally, the IASB decided to conclude the PIR.
• Financial instruments with characteristics of equity: The staff provided a high-level summary of the feedback and key themes emerging from comment letters that have been received in response to the Exposure Draft (ED) Financial Instruments with Characteristics of Equity and from investor outreach activities. No decisions were made.
• Second comprehensive review of the IFRS for SMEs Accounting Standard: The IASB continued the redeliberations of its proposals in the ED Third edition of the IFRS for SMEs Accounting Standard. The IASB made decisions with regard to Section 9 Consolidated and Separate Financial Statements, Section 23 Revenue from Contracts with Customers, differences between the ED and IFRS 19, and transition requirements.
• Proposed IFRS Taxonomy Update—Contracts for Renewable Electricity: The IASB received an oral update on the staff’s recommendation to develop a proposed IFRS Taxonomy update based on Exposure Draft Contracts for Renewable Electricity. The Due Process Oversight Committee’s (DPOC) permission is required to publish a proposed IFRS Taxonomy update based on an exposure draft before the related standard or amended standard is issued. The IASB agreed with the staff’s recommendation to the DPOC.
• Rate-regulated activities: The IASB continued the redeliberations of its proposals in the ED Regulatory Assets and Regulatory Liabilities. The IASB decided that the final standard should clarify that the income tax consequences of a regulatory asset or regulatory liability may give rise to a separate regulatory asset or regulatory liability and that an entity would determine the tax base of a regulatory asset or regulatory liability by applying the requirements in IAS 12. The IASB also decided that the final standard retain the proposal to delete the temporary exception in IAS 8:54G.
• PIR of IFRS 15 Revenue from Contracts with Customers: The IASB analysed the feedback related to matters not discussed in previous meetings. The IASB decided to take no further action on application matters related to allocating the transaction price to performance obligations and other aspects of applying IFRS 15 raised by respondents.

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

Background

In 2022, the IASB concluded its post-implementation review of the classification and measurement requirements of IFRS 9 Financial Instruments. In general, the IASB found that preparers can apply the requirements consistently. However, the IASB identified some requirements that would benefit from clarification to improve their understandability.

The IASB believed that two of the matters should be addressed quickly and other matters, although of a lower priority, would also benefit from being addressed together with these issues. The IASB came to the conclusion that it would be most efficient for stakeholders if the IASB issued all amendments at the same time. The amendments issued today finalise the proposals in the March 2023 exposure draft.

Changes

The amendments in Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) are:

• Derecognition of a financial liability settled through electronic transfer: The amendments to the application guidance of IFRS 9 permit an entity to deem a financial liability (or part of it) that will be settled in cash using an electronic payment system to be discharged before the settlement date if specified criteria are met. An entity that elects to apply the derecognition option would be required to apply it to all settlements made through the same electronic payment system.
• Classification of financial assets:
  
  • Contractual terms that are consistent with a basic lending arrangement. The amendments to the application guidance of IFRS 9 provide guidance on how an entity can assess whether contractual cash flows of a financial asset are consistent with a basic lending arrangement. To illustrate the changes to the application guidance, the amendments add examples of financial assets that have, or do not have, contractual cash flows that are solely payments of principal and interest on the principal amount outstanding.
  • Assets with non-recourse features. The amendments enhance the description of the term ‘non-recourse’. Under the amendments, a financial asset has non-recourse features if an entity’s ultimate right to receive cash flows is contractually limited to the cash flows generated by specified assets.
  • Contractually linked instruments. The amendments clarify the characteristics of contractually linked instruments that distinguish them from other transactions. The amendments also note that not all transactions with multiple debt instruments meet the criteria of transactions with multiple contractually linked instruments and provide an example. In addition, the amendments clarify that the reference to instruments in the underlying pool can include financial instruments that are not within the scope of the classification requirements.
• Disclosures:
  • Investments in equity instruments designated at fair value through other comprehensive income. The requirements in IFRS 7 are amended for disclosures that an entity provides in respect of these investments. In particular, an entity would be required to disclose the fair value gain or loss presented in other comprehensive income during the period, showing separately the fair value gain or loss that relates to investments derecognised in the period and the fair value gain or loss that relates to investments held at the end of the period.
  • Contractual terms that could change the timing or amount of contractual cash flows. The amendments require the disclosure of contractual terms that could change the timing or amount of contractual cash flows on the occurrence (or non-occurrence) of a contingent event that does not relate directly to changes in a basic lending risks and costs. The requirements apply to each class of financial asset measured at amortised cost or fair value through other comprehensive income and each class of financial liability measured at amortised cost.

The amendments also include amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures, which limit the disclosure requirements for qualifying subsidiaries.

Effective date and transition

The amendments are effective for annual reporting periods beginning on or after 1 January 2026. Earlier application of either all the amendments at the same time or only the amendments to the classification of financial assets is permitted.

An entity is required to apply the amendments retrospectively. An entity is not required to restate prior periods to reflect the application of the amendments, but may do so if, and only if, it is possible to do so without the use of hindsight.

Dissenting opinion

One Board member disagrees with the effective date of the amendments to IFRS 9 relating to the date of initial recognition or derecognition of financial assets or financial liabilities and, therefore, dissented from the issuance of the amendments.

Additional information

Please click for:

• IASB press release (link to IFRS Foundation website)
• Our IAS Plus project page on Classification and measurement of financial instruments
• Our iGAAP in Focus newsletter explaining the amendments

The guide is a tailored version of Sustainability Reporting—The Guide To Preparation (available here on the ACCA website) to help SMEs determine, collect and communicate sustainability-related information. The guide is based on the requirements of the ISSB standards because the ACCA expects that many of the sustainability-related information requests to SMEs are based on those standards.

The guide sets out the following eight stages of sustainability reporting for SMEs:

1. Allocating responsibility for sustainability reporting
2. Establishing the reporting landscape
3. Determining the material sustainability-related information to be reported
4. Determining the data requirements
5. Collecting the data
6. Reporting on the collected data
7. Implementing reporting
8. Verifying what is reported, and continual improvement

Please click to access the guide and 13 short explainer videos on the ACCA website.

The podcast high­lights some of the projects that were discussed during the meeting, including:

• Feedback related to exposure draft for financial instruments with characteristics of equity.
• De­vel­op­ments in the post-im­ple­men­ta­tion review of IFRS 9 impairment project

The podcast can be accessed here on the IFRS Foun­da­tion website.

The publication follows the first and second exposure drafts released in November 2022 and September 2023 respectively. Exposure draft 1 focused on the overarching framework for NPO financial reporting. Exposure draft 2 focused on some of the key accounting transactions that are relevant for NPO financial reporting.

The third and final exposure draft aims to address issues such as fund accounting, classification of expenses (including support costs and fundraising costs) and donor reporting formats. It can be accessed through this subsite on the IFR4NPO website. Comments are requested by 16 September 2024.

Below is an analysis of all changes made to the work plan since our last analysis on 29 April 2024.

Stan­dard-set­ting projects

• Business Combinations — Disclosures, Goodwill and Impairment — Exposure draft feedback is now expected in Q4 2024 (previously H2 2024).
• Subsidiaries without Public Accountability: Disclosures — This project has been removed from the work plan since the IASB issued IFRS 19 on 9 May 2024.
• Financial Instruments with Characteristics of Equity — The next step in this project is now a decision on the project direction (expected in July 2024).

Main­te­nance projects

• Amendments to the Classification and Measurement of Financial Instruments —This project will see final amendments to be published on 30 May 2024.
• Cli­mate-re­lated and Other Un­cer­tain­ties in the Financial State­ments— An exposure draft expected to be published in July 2024 (previously Q3 2024).
• Power purchase agreements — An exposure draft of proposed amendments was published on 8 May 2024. The project is now in the feedback stage which is expected to start in Q3 2024.
• Updating the Subsidiaries without Public Accountability: Disclosures Standard — An exposure draft is now expected in July 2024 (previously Q3 2024).
• Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity (IAS 21) — An exposure draft is now expected in July 2024 (previously Q3 2024).

Research projects

• In­tan­gi­ble Assets— Review of research is now expected in Q4 2024 (previously H2 2024).
• Post-im­ple­men­ta­tion Review of IFRS 9 — Impairment— A feedback statement is now expected in July 2024 (pre­vi­ously Q3 2024).

Other projects

• IFRS Accounting Taxonomy Update — Primary Financial State­ments— A proposed taxonomy update was published on 23 May 2024. The project is now in the feedback stage which is expected to start in the H2 2024.

The above is a faithful com­par­i­son of the IASB and ISSB work plan at 29 April 2024 and 28 May 2024. For access to the current work plan at any time, please click here.