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Annual Improvements

IASB meeting summaries


 IASB February 2012: 2011-2013 cycle


 

 

The IASB discussed two issues that the IFRS Interpretations Committee (the Interpretations Committee) had recommended that the Board should include within the Improvements to IFRSs exposure draft to be published in the third quarter 2012 (called the 2011-2013 cycle).

IFRS 3 Business Combinations�Scope exclusion for the formation of a joint venture

The Board discussed a proposed amendment to paragraph 2(a) of IFRS 3 to clarify the scope of IFRS 3 and ensure that the scope of the IFRS is not changed after the adoption of IFRS 11 Joint Arrangements.

The amendment would:

  • exclude the accounting for the formation of all types of joint arrangements (joint ventures and joint operations) from the scope of IFRS 3; and
  • clarify that the scope exclusion in paragraph 2(a) of IFRS 3 only addresses the accounting in the financial statements of the joint arrangement itself, and not the accounting for the interest in a joint arrangement in the financial statements of a party to the joint arrangement.

The Board tentatively decided to include the proposed amendment within the Improvements to IFRSs exposure draft to be published in the third quarter of 2012. All Board members present voted in favour of this decision.

IFRS 3 Business Combinations�Definition of a business

The Board discussed a proposed amendment to IAS 40 Investment Property, to clarify that IFRS 3 and IAS 40 are not mutually exclusive when investment property with associated insignificant ancillary services as specified in paragraph 11 of IAS 40 is acquired.

The Board noted that judgement is needed to determine whether the acquisition of investment property is the acquisition of an asset or a group of assets or a business combination in the scope of IFRS 3 and that this judgement is not based on paragraphs 7-15 of IAS 40 but on the guidance in IFRS 3. Paragraphs 7-15 of IAS 40 relate to the judgement needed to distinguish investment property from owner-occupied property.

The Board tentatively decided to include the proposed amendment within the Improvements to IFRSs exposure draft to be published in the third quarter of 2012. All Board members present voted in favour of this decision.

IFRS Interpretations committee�agenda rejection notices

Over the last 12 months, the Trustees of the IFRS Foundation have been undertaking a review of the efficiency and effectiveness of the IFRS Interpretations Committee. One of the areas that has attracted significant comment has been the subject of the rejection notices that the Interpretations Committee issues when it decides not to take an issue onto its agenda. The Board discussed proposals for changes to the way in which the Interpretations Committee explains its reasons for not taking an issue onto its agenda. In summary the Board tentatively agreed that:

  • When the Interpretations Committee reaches a conclusion on an issue, but for which it has decided not to add the item to its agenda, it should explain its decision in a rejection notice.
  • The Interpretations Committee's rejection notices do not form part of IFRSs and therefore do not change the requirements of IFRSs.
  • Because the rejection notices are not part of IFRSs, there is no need for them to have an effective date or transition requirements.
  • The rejection notices are not intended to determine whether certain accounting practices are errors; that judgement is left to entities, their auditors and their regulators.
  • The comment period for the tentative rejection notices should be doubled to 60 days to allow more time for constituents to respond.
  • The Board will continue to receive an update on the work of the Interpretations Committee after each Committee meeting, including information about tentative rejection notices, but the Board will not be asked to approve or ratify the rejection notices.

These proposals will be reported to the Trustees at their next meeting.

Date: 3/1/2012