The staff presented a preliminary analysis of the comments received on the Exposure Draft published by the Board in December 2007. The Exposure Draft addressed the accounting in the stand-alone financial statements of the entity that receives goods and services from its suppliers, including employees, for certain share-based arrangements that are cash-settled when the entity itself does not have any obligation to make the required payments to its suppliers.
The staff presented a summary of the comments made in the 44 letters received. The summary identified the main areas of concern about the proposed scope and measurement the staff believed should be reconsidered before finalising the amendments. Many respondents acknowledged that the principal objective of the proposals was to align the accounting for share-based transactions of similar economic substance, no matter whether they are equity-settled or cash-settled, and to remove structuring incentives. However, many respondents either expressed concern about the scope, or disagreed with some aspects of the measurement proposal. Some questioned some of the bases for the consensus reached.
After considering the significant points raised in the comment letters, the IFRIC agreed with the staff’s analysis of the main issues to be redeliberated, which are:
- the scope for these arrangements with similar substance should be set out more clearly and consistently among IFRSs;
- the amended scope for these arrangements should be consistent with the definitions of share-based payments in IFRS 2;
- the classification and measurement for these arrangements as cash-settled transactions by the entity when it does not have any obligation;
- the attribution of the parent’s liability and remeasurement by the subsidiary in the absence of existing concepts in IFRSs and the risk of unintended analogy for other transactions.
The IFRIC also approved the proposed project timetable for redeliberations.