This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

News

IASB document (blue) Image

IASB publishes proposed amendments to IAS 21 to clarify the accounting when there is a lack of exchangeability

20 Apr 2021

The International Accounting Standards Board (IASB) has published an exposure draft 'Lack of Exchangeability (Proposed amendments to IAS 21)' that contains proposed guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. Comments are requested by 1 September 2021.

 

Background

The IFRS Interpretations Committee received a submission about the determination of the exchange rate when there is a long-term lack of exchangeability as IAS 21 The Effects of Changes in Foreign Exchange Rates does not include explicit requirements on the exchange rate an entity uses when the spot exchange rate is not observable. The Committee researched possible narrow-scope standard-setting and concluded that the best way forward was to recommend that the IASB propose narrow-scope amendments to IAS 21 to address the matter.

In November 2019, the IASB took the matter over and during its subsequent meetings discussed how to assess whether a currency is exchangeable and which exchange rate to use when it is not. The Board decided to propose to add requirements to IAS 21 that will help an entity determine whether a currency is exchangeable into another currency and requirements the entity would apply when it is not.

 

Suggested changes

The proposed amendments in exposure draft ED/2021/4 Lack of Exchangeability (Proposed amendments to IAS 21) would amend IAS 21 to:

  • Specify when a currency is exchangeable into another currency and when it is not — a currency is exchangeable when an entity is able to exchange that currency for the other currency, even if indirectly through another currency, through markets or exchange mechanisms that create enforceable rights and obligations without undue delay; a currency is not exchangeable into the other currency if an entity can only obtain an insignificant amount of the other currency.
  • Specify how an entity determines the exchange rate to apply when a currency is not exchangeable — when a currency is not exchangeable an entity estimates the spot exchange rate as a rate that the entity would have been able to access had the currency been exchangeable, would have applied to an orderly transaction between market participants, and would faithfully reflect the economic conditions prevailing; an entity would also be able to use an observable exchange rate as the estimated spot exchange rate if it meets the noted requirements or the first subsequent exchange rate after exchangeability is restored.
  • Require the disclosure of additional information when a currency is not exchangeable — when a currency is not exchangeable an entity discloses information that would enable users of its financial statements to evaluate how a currency’s lack of exchangeability affects, or is expected to affect, its financial performance, financial position and cash flows.

Comments on the proposed changes are requested by 1 September 2021.

 

Effective date

The exposure draft does not contain a proposed effective date as the IASB intends to decide on this after exposure. Early application would be permitted. The amendments would apply prospectively from the date of initial application of the amendments.

 

Additional information

Please click for:

 

IASB meeting (blue) Image

April 2021 IASB meeting agenda posted

16 Apr 2021

The IASB has posted the agenda for its next meeting, which will be held via video conference on 27–28 April 2021.

During the meeting, the IASB will discuss the following:

  • Goodwill
  • Primary financial statements
  • Maintenance and consistent application
  • Dynamic risk management
  • Financial instruments with characteristics of equity

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 AC meeting (mid blue) Image

Agenda for the May 2021 IFRS Advisory Council meeting

16 Apr 2021

An agenda has been released for an additional meeting of the IFRS Advisory Council which will be held by remote participation on 11 May 2021.

Apart from the Chair's welcome and preview and an address by the IASB Chair Hans Hoogervorst, the only topic of discussion will be the recently launched third agenda consultation.

Agenda papers for the meeting will be made available on the IASB website.

IFRS Advisory Council (mid blue) Image

IFRS Foundation Trustees seek to fill Advisory Council vacancies, are looking for new Chair

16 Apr 2021

The Trustees of the IFRS Foundation are calling for candidates to fill vacancies occurring at the end of 2021 for membership to the IFRS Advisory Council. They are also seeking a new Chair for a three-year appointment commencing on 1 February 2022.

The IFRS Advisory Council provides a forum for the IASB to consult a wide range of interested parties affected by the IASB's work, with the objective of advising the Board on agenda decisions and priorities in the Board's work, informing the Board of the views of the organisations and individuals on the Council on major standard-setting projects, and giving other advice to the Board or to the Trustees.

For more information, please see the press releases on the IASB website:

IASB (International Accounting Standards Board) (blue) Image

IFRS Foundation seeks IASB Board members

15 Apr 2021

The IFRS Foundation Trustees are seeking to appoint four new Board members, two from Europe and two from the Americas.

IASB members are appointed for an initial five-year term with the pos­si­bil­ity of being reap­pointed for another three years (in ex­cep­tional cir­cum­stances for another five years). Nom­i­na­tions for IASB Board mem­ber­ship close on 30 June 2021.

For more in­for­ma­tion, see the press release on the IASB’s website.

IFRIC meeting (blue) Image

Pre-meeting summaries for the April 2021 IFRS Interpretations Committee meeting

15 Apr 2021

The Committee meets on Tuesday 20 April 2021, via video conference. The Committee will discuss the comment letter analyses for three tentative agenda decisions.

Comments on tentative agenda decisions

IAS 19 Employee Benefits—Attributing Benefit to Periods of Service: In December 2020, the Committee discussed the periods of service an entity attributes the benefit for a defined benefit plan when the amount of the retirement benefit to which an employee is entitled depends on the length of services before retirement. The Committee concluded that the entity attributes the period of service to only the last 16 years of employee services. A number of respondents commented that the Committee should not rule out the possibility of attributing the obligation from the date of employment applying the overarching objective in IAS 19:1.

The staff continue to support their view through analysis of these comments and conclude that the agenda decision should be finalised with some changes.

IAS 1 Presentation of Financial Statements—Classification of Debt with Covenants as Current or Non-current: In December 2020, the Committee discussed the informal feedback and enquiries received concerning the different interpretations arising from the application of recent amendments to IAS 1 related to the classification of liabilities. In the meeting, the Committee members generally agreed with the analysis of how an entity determines whether it has "the right to defer settlement" when a long-term liability is subject to a condition and its compliance with the condition is tested at dates after the reporting date, applying the amended IAS 1, in the three cases described. However, almost all of the respondents expressed concerns about the outcome of applying the IAS 1 amendments and suggested the matter be referred to the Board.

The staff recommend reporting the matter to the Board but at the same time, asks whether the Committee wishes to finalise the agenda decision in view of the fact that that the principles and requirements in IFRS Standards provide an adequate basis for the conclusion reached in the three cases described in the fact pattern.

IFRS 9 Financial Instruments—Hedging Variability in Cash Flows due to Real Interest Rates: In December 2020, the Committee discussed whether a hedge of the variability in cash flows arising from the changes in the real interest rate could rebut the presumption in IFRS 9:B6.3.13 and be accounted for as a cash flow hedge. The Committee members generally agreed with the staff's conclusion that hedge accounting cannot be applied to the inflation swap in the fact pattern described. Half of the respondents to the tentative agenda decision did not agree with the discussion explaining that cash flow hedge accounting could not be applied. The staff analysed the reasons for the disagreement and continue to support the conclusion in the agenda decision. The staff recommend the agenda decision be finalised.

Work in progress: The staff are analysing requests related to the accounting for power purchase agreements in a gross pool electricity market.

The full agenda for the meeting and our com­pre­hen­sive pre-meet­ing summaries can be found here.

Deloitte document (mid gray) Image

We comment on two IFRS Interpretations Committee tentative agenda decisions

14 Apr 2021

We have published our comment letters on IFRS Interpretations Committee tentative agenda decisions related to IAS 2 and IAS 10, as published in the February 2021 IFRIC Update.

More in­for­ma­tion about the issues is set out below:

Issue

Agenda decision supported?

More in­for­ma­tion

IAS 2 — Costs Necessary to Sell Inventories

We do not agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda as we do not agree with the conclusion that has been reached in the agenda decision, both on technical and practical grounds.

o    Deloitte comment letter

o    Committee dis­cus­sion

IAS 10 — Preparation of Financial Statements when an Entity is No Longer a Going Concern  

Yes

o    Deloitte comment letter

o    Committee dis­cus­sion

Click to access all our comment letters to the IASB, IFRS Foun­da­tion, and IFRS In­ter­pre­ta­tions Committee.

IFRS Foundation (blue) Image

IFRS Foundation announces new Board member

14 Apr 2021

The Trustees of the IFRS Foundation have announced the appointment of Bertrand Perrin as IASB Board member.

Mr Perrin has extensive experience as a preparer and has worked closely with the Board and the Foundation for several years, most recently as a member of the IFRS Interpretations Committee. He is currently also serving as a member of the EFRAG’s Advisory Panel on Intangibles and is the Director of Accounting Standards and Special Projects at Vivendi. Mr Perrin will fill the European seat, succeeding Françoise Flores, whose term will end at the end of June.

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

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG draft comment letter on the IASB's proposed new standard on rate-regulated activities

14 Apr 2021

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2021/1 'Regulatory Assets and Regulatory Liabilities'.

The proposed new standard is intended to replace IFRS 14 Regulatory Deferral Accounts.

In its draft comment letter EFRAG

  • generally agrees with the IASB proposals and considers that the benefits would outweigh the costs for both users and preparers;
  • is seeking views of constituents on possible unintended consequences on the impact of the scope outside the utilities sector;
  • supports the three proposed components of the total allowed compensation except for the treatment of construction work in progress;
  • disagrees with the proposed application of a minimum adequate rate as the discount rate for regulatory assets, when the regulatory interest rate provided is insufficient;
  • considers that the level of detail required to meet the specific disclosure objectives might impose a significant burden on reporting entities to generate the information; and
  • Questions the proposed amendments to IFRS 1 and IFRS 3.

Comments on EFRAG's draft comment letter are requested by 28 July 2021. For more information, see the press release and the draft comment letter on the EFRAG's website.

IFRS IC meeting (blue) Image

April 2021 IFRS Interpretations Committee meeting agenda posted

09 Apr 2021

The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held by video conference on 20 April 2021.

The Committee will discuss the following:

  • Administrative matters
  • Comment letter analysis:
    • IAS 19 — Attributing benefit to periods of service
    • IAS 1 — Classification of debt with covenants as current or non-current
    • IFRS 9 — Hedging variability in cash flows due to real interest rates
  • Work in progress

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.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.