Deloitte comment letter on tentative agenda decision on classification of debt with covenants as current or non-current (IAS 1)

Published on: 15 Feb 2021

We have commented on the IFRS Interpretations Committee's publication in the December 2020 IFRIC Update of the tentative decision not to take onto the Committee’s agenda the request for clarification on whether an entity has a right to defer settlement of a liability for at least 12 months after the reporting period when the right to defer is subject to specified conditions.

We believe that this issue is of such significance that it cannot be resolved by the Committee through an agenda decision. We strongly believe that the Board should reconsider the conclusion reached in the recent amendment to IAS 1 to ensure that it provides a principle that results in relevant classification of debt with covenants as current or non-current.

We are very concerned that the conclusion proposed in the tentative agenda will often result in a presentation of an entity’s financial position that does not provide relevant information, especially for those entities that have cyclical or seasonal businesses or are emerging growth or start-up businesses.


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