IASB Update April 2024

Work plan overview

IASB work plan update (Agenda Paper 8)

The IASB met on 25 April 2024 to discuss a proposed framework for helping the IASB prioritise technical projects on its work plan.

The IASB was not asked to make any decisions.

Next step

The IASB will seek feedback on the proposed framework from the Trustees of the IFRS Foundation’s Due Process Oversight Committee and from the IFRS Advisory Council.

Research and standard-setting

Post-implementation Review of IFRS 15 Revenue from Contracts with Customers (Agenda Paper 6)

The IASB met on 24 April 2024 to analyse stakeholder feedback on the Request for Information Post-implementation Review of IFRS 15 Revenue from Contracts with Customers. The analysis covered matters raised by stakeholders in relation to applying:

• IFRS 15 with other IFRS Accounting Standards (Agenda Papers 6A–6E); and

• the requirements in IFRS 15 on the consideration payable to a customer and on a significant financing component in determining a transaction price (Agenda Paper 6F).

Applying IFRS 15 with IFRS 9 (Agenda Paper 6A)

In response to the feedback, the IASB tentatively decided to take no further action on the matters related to:

1. the accounting for price reductions;
2. the accounting for liabilities arising from IFRS 15; and
3. other aspects of applying IFRS 15 with IFRS 9 Financial Instruments.

All 14 IASB members agreed with these decisions.

Applying IFRS 15 with IFRS 3 (Agenda Paper 6B)

In response to the feedback, the IASB tentatively decided to take no further action on the matters related to:

1. the measurement of contract assets and contract liabilities acquired as part of a business combination; and
2. other aspects of applying IFRS 15 with IFRS 3 Business Combinations.

Eight of 14 IASB members agreed with decision (a) and all 14 IASB members agreed with decision (b).

Applying IFRS 15 with IFRS 10 and IFRS 11 (Agenda Paper 6C)

In response to the feedback, the IASB decided to confirm it will consider the priority of the matters related to applying IFRS 15 with IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements in the next agenda consultation instead of as part of the post-implementation review of IFRS 15.

All 14 IASB members agreed with this decision.

Applying IFRS 15 with IFRS 16 (Agenda Paper 6D)

In response to the feedback, the IASB tentatively decided:

1. to gather further evidence in the forthcoming post-implementation review of IFRS 16 Leases on the application matters related to assessing whether the transfer of an asset is a sale in a sale and leaseback transaction; and
2. to take no further action on the matters related to:
   1. the accounting for contracts that contain lease and non-lease components; and
   2. other aspects of applying IFRS 15 with IFRS 16.

All 14 IASB members agreed with these decisions.

Applying IFRS 15 with other IFRS Accounting Standards (Agenda Paper 6E)

In response to the feedback, the IASB tentatively decided: 

1. to classify as low priority the matter related to applying the requirements in IFRIC 12 Service Concession Arrangements on contractual obligations to maintain or restore service concession infrastructure; and 
2. to take no further action on the other matters related to applying IFRS 15 with other IFRS Accounting Standards. 

Seven of 14 IASB members agreed with decision (a). The Chair used his additional casting vote, making the vote eight–seven in favour of the decision. Thirteen of 14 IASB members agreed with decision (b).

Determining the transaction price—Consideration payable to a customer and significant financing component (Agenda Paper 6F)

In response to the feedback, the IASB tentatively decided:

1. to classify as low priority the matters related to the consideration payable to a customer; and
2. to take no further action on the matters related to:
   1. the discount rate for contracts with a significant financing component; and
   2. other aspects of accounting for a significant financing component.

Eleven of 14 IASB members agreed with decision (a) and all 14 IASB members agreed with decision (b).

Next step

The IASB will discuss the remaining feedback on:

1. the Request for Information; and 
2. an updated academic literature review.

Rate-regulated Activities (Agenda Paper 9)

The IASB met on 23 April 2024:

• to redeliberate the proposals on the minimum interest rate in paragraphs 50–53 of the Exposure Draft Regulatory Assets and Regulatory Liabilities (Agenda Paper 9A);
• to discuss whether the scope of the prospective IFRS Accounting Standard on rate-regulated activities (prospective RRA Standard) should exclude regulatory assets and regulatory liabilities that might arise from insurance contracts within the scope of IFRS 17 Insurance Contracts (Agenda Paper 9B); and
• to redeliberate the proposed amendments to IFRS 3 Business Combinations and IFRS 5 Non-current Assets Held for Sale and Discontinued Operations in the Exposure Draft (Agenda Paper 9C).

Discounting of future cash flows—Minimum interest rate (Agenda Paper 9A)

Regarding the prospective RRA Standard, the IASB tentatively decided:

1. to retain the proposals in paragraphs 50–52 of the Exposure Draft that would require an entity to assess whether there is any indication that the regulatory interest rate for a regulatory asset might be insufficient to compensate the entity for the time value of money and for uncertainty in the future cash flows arising from the regulatory asset, and to use the minimum interest rate as the discount rate if it is higher than the regulatory interest rate;
2. to clarify in the application guidance that an entity performing the assessment described in (a) would not be required to calculate the minimum interest rate for the regulatory asset or carry out an exhaustive search for indications that the regulatory interest rate for the regulatory asset might be insufficient as described in (a);
3. to retain the proposal in paragraph 53 of the Exposure Draft that would require an entity to use the regulatory interest rate as the discount rate for a regulatory liability in all circumstances;
4. to provide guidance on the estimation of the minimum interest rate, and to include in that guidance principles used in other IFRS Accounting Standards to help entities carry out that estimation;
5. to exempt an entity from applying the proposals on the minimum interest rate to a regulatory asset that arises from variances between estimated and actual costs or volume, and to require an entity to apply the requirements once the regulator determines the final balance to be included in future regulated rates; and
6. to require an entity that chooses to apply the exemption described in (e) to disclose that fact and the carrying amount of regulatory assets at the end of the reporting period to which the entity has applied that exemption.

Seven of 14 IASB members agreed with decisions (a)–(c). The Chair used his additional casting vote, making the vote eight–seven in favour of these decisions. All 14 IASB members agreed with decisions (d)–(f).

Scope—Interaction with IFRS 17 (Agenda Paper 9B)

The IASB tentatively decided to exclude from the scope of the prospective RRA Standard regulatory assets and regulatory liabilities that might arise when premiums charged in insurance contracts that fall within the scope of IFRS 17 are regulated.

All 14 IASB members agreed with this decision.

Amendments to IFRS 3 and IFRS 5 (Agenda Paper 9C)

The IASB tentatively decided to retain the proposals in the Exposure Draft:

1. to create an exception to the recognition and measurement principles in IFRS 3 for regulatory assets acquired and regulatory liabilities assumed; and
2. to exclude regulatory assets from the scope of IFRS 5.

All 14 IASB members agreed with these decisions.

Next step

The IASB will continue to redeliberate the project proposals.

Intangible Assets (Agenda Paper 17)

The IASB met on 23 April 2024 to start its research project and to discuss the initial work it will do on that project.

The IASB was not asked to make any decisions.

Next step

The IASB will consult its advisory bodies and other stakeholders to help inform the project plan.

Post-implementation Review of IFRS 9—Impairment (Agenda Paper 27)

The IASB met on 24 April 2024 to discuss feedback on matters relating to the application of the impairment requirements in IFRS 9 Financial Instruments. In particular, the IASB discussed how an entity applies the impairment requirements:

1. to loan commitments and financial guarantee contracts;
2. to purchased or originated credit-impaired financial assets; 
3. with other requirements in IFRS 9 such as those relating to modification, derecognition or write-off of financial assets; and
4. with requirements in other IFRS Accounting Standards, including IFRS 15 Revenue from Contracts with Customers (see also Agenda Paper 6A).

The IASB tentatively decided:

1. to classify as low priority the matters relating to financial guarantee contracts and to consider these matters during the next agenda consultation.
2. to take no additional action on the matters that arise from applying the impairment requirements in IFRS 9 with other requirements in that Standard—namely, the requirements for modification, derecognition and write-off of financial assets. The IASB had already decided to consider these matters as part of its pipeline project on Amortised Cost Measurement.
3. to take no further action on the other matters discussed.

All 14 IASB members agreed with these decisions. 

Next step

The IASB will discuss the feedback on other topics identified in the project plan.

Second Comprehensive Review of the IFRS for SMEs Accounting Standard (Agenda Paper 30)

The IASB met on 22 April 2024 to redeliberate the proposals in the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard.

Proposed revised Section 23 Revenue from Contracts with Customers—Disclosure requirements (Agenda Paper 30A)

The IASB tentatively decided to withdraw its proposal to require an SME to disclose revenue disaggregated into categories, showing separately, as a minimum, revenue arising from:

1. the sale of goods;
2. the rendering of services;
3. royalties;
4. commissions; and
5. any other significant types of revenue from contracts with customers.

Instead, the IASB tentatively decided to include in the proposed revised Section 23 of the IFRS for SMEs Accounting Standard:

1. a requirement that an SME disclose revenue disaggregated into categories that depict its financial performance; and
2. examples of disaggregation categories that might be appropriate for SMEs to use.

All 14 IASB members agreed with these decisions.

The IASB tentatively decided to confirm its proposals to require an SME to disclose:

1. the opening and closing balances of receivables, contract assets and contract liabilities from contracts with customers;
2. revenue recognised in the reporting period that was included in the contract liability balance at the beginning of the period; and
3. the closing balances of assets recognised from the costs incurred to fulfil a contract with a customer, by main category of asset.

All 14 IASB members agreed with these decisions.

The IASB tentatively decided to withdraw its proposals to require an SME:

1. to disclose revenue recognised in the reporting period from promises satisfied or partially satisfied in previous periods;
2. to disclose the amount of amortisation and any impairment losses recognised in the reporting period from assets recognised from the costs incurred to fulfil a contract with a customer; and
3. to provide a quantitative or qualitative explanation of the significance of unsatisfied promises and when they are expected to be satisfied.

Eleven of 14 IASB members agreed with decision (a) and all 14 IASB members agreed with decisions (b)–(c).

The IASB tentatively decided to require an SME:

1. to disclose a description of the nature of the goods or services that the SME has promised to transfer to customers, highlighting any promises to arrange for another party to transfer goods or services to the customer; and
2. to explain the judgements that had a significant effect on the amounts the SME recognised in its financial statements that it made when:
   1. determining the transaction price; and
   2. allocating the transaction price to the promises identified in the contract.

All 14 IASB members agreed with these decisions.

The IASB tentatively decided to amend paragraph 4.11(b) of the Standard to remove the requirement for an SME to subclassify trade and other receivables to show separately receivables arising from accrued income not yet billed.

All 14 IASB members agreed with this decision.

Proposed new Section 12 Fair Value Measurement—Use of plainer language (Agenda Paper 30B)

The IASB tentatively decided:

1. to consider whether plainer language can be used in the new and revised sections of the third edition of the Standard; and
2. to include in the proposed new Section 12 of the Standard the definition of ‘highest and best use’ used in IFRS 13 Fair Value Measurement.  

All 14 IASB members agreed with these decisions.

Intragroup issued financial guarantee contracts (Agenda Paper 30C)

The IASB tentatively decided it would explore measuring intragroup financial guarantee contracts issued for nil consideration by applying Section 21 Provisions and Contingencies.

All 14 IASB members agreed with this decision.

Next steps

The IASB will discuss the findings from its fieldwork on the potential effects of requiring an SME that provides financing to customers as one of its primary businesses to use an expected credit loss model. The IASB will continue to redeliberate the proposals in the Exposure Draft, including those for issued financial guarantee contracts and transition requirements.

Maintenance and consistent application

Maintenance and consistent application (Agenda Paper 12)

The IASB met on 25 April 2024: 

• to consider two agenda decisions discussed at the March 2024 meeting of the IFRS Interpretations Committee (Committee) (Agenda Paper 12A and Agenda Paper 12B); and
• to receive an update on that meeting (Agenda Paper 12C).

Climate-related Commitments (IAS 37) (Agenda Paper 12A)

The IASB was asked whether it objected to the Agenda Decision Climate-related Commitments (IAS 37 Provisions, Contingent Liabilities and Contingent Assets).

No IASB member objected to the Agenda Decision.

Next step

The Agenda Decision will be published in April 2024 in an addendum to IFRIC Update March 2024.

Payments Contingent on Continued Employment during Handover Periods (IFRS 3) (Agenda Paper 12B)

The IASB was asked whether it objected to the Agenda Decision Payments Contingent on Continued Employment during Handover Periods (IFRS 3 Business Combinations).

No IASB member objected to the Agenda Decision.

Next step

The Agenda Decision will be published in April 2024 in an addendum to IFRIC Update March 2024.

IFRIC Update March 2024 (Agenda Paper 12C)

The IASB received an update on the Committee’s March 2024 meeting. Details of this meeting were published in IFRIC Update March 2024.

The IASB was not asked to make any decisions.

Climate-related and Other Uncertainties in the Financial Statements (Agenda Paper 14)

The IASB met on 22 April 2024 to discuss:

• the project direction (Agenda Paper 14A); and
• the due process steps it has taken to begin the process for balloting an exposure draft (Agenda Paper 14B).

Project direction (Agenda Paper 14A)

The IASB tentatively decided:

1. to provide examples to illustrate how an entity applies IFRS Accounting Standards to report the effects of climate-related and other uncertainties in its financial statements;
2. to include the examples as illustrative examples that would accompany IFRS Accounting Standards; and
3. to publish an exposure draft to obtain feedback from stakeholders about the examples.

All 14 IASB members agreed with these decisions.

Due process and permission to begin the balloting process (Agenda Paper 14B)

The IASB set a 120-day comment period for the exposure draft.

All 14 IASB members agreed with this decision.

All 14 IASB members confirmed they were satisfied the IASB has complied with the applicable due process requirements and has undertaken sufficient consultation and analysis to begin the process for balloting the exposure draft.

No IASB member indicated an intention to dissent from the proposals in the exposure draft.

Next step

The IASB expects to publish the exposure draft in the third quarter of 2024.

Provisions—Targeted Improvements (Agenda Paper 22) 

The IASB met on 25 April 2024 to discuss possible amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. These amendments relate to:

• the present obligation recognition criterion (Agenda Paper 22A);
• costs payable if a measure of an entity’s activity in a period exceeds a specified threshold (threshold-triggered costs) (Agenda Paper 22B);
• application guidance on determining discount rates (Agenda Paper 22C); and
• requirements for disclosure of information about discount rates (Agenda Paper 22D).

Present obligation recognition criterion (Agenda Paper 22A)

The IASB tentatively decided to propose:

1. updating the ‘liability’ definition and the wording of the present obligation recognition criterion applied in IAS 37 to align them with the Conceptual Framework for Financial Reporting (Conceptual Framework) definition of a liability;
2. clarifying the requirements supporting the present obligation recognition criterion by:
   1. separating out and explaining three conditions within the criterion; and
   2. expanding the decision tree in the Guidance on implementing IAS 37 Provisions, Contingent Liabilities and Contingent Assets to show the process an entity could follow to determine whether to recognise a provision, disclose a contingent liability or do neither;
3. replacing the requirements supporting the present obligation recognition criterion with new requirements based on concepts in the Conceptual Framework, and then withdrawing IFRIC 21 Levies;
4. improving the wording of the explanations of the application requirements for restructuring provisions, without changing those requirements;
5. adding new examples to the Guidance on implementing IAS 37 Provisions, Contingent Liabilities and Contingent Assets and updating the explanation of the conclusions for some of the existing examples, without changing those conclusions; and
6. adding no requirements relating specifically to net zero transition commitments.

All 14 IASB members agreed with these decisions.

Threshold-triggered costs (Agenda Paper 22B)

The IASB tentatively decided to propose adding application requirements to IAS 37 for threshold-triggered costs, specifying that:

1. a present obligation for a threshold-triggered cost arises as the entity carries out the activity that contributes to the total amount of activity on which the cost is measured; and
2. at any date within the measurement period, the amount of the present obligation is a portion of the total estimated cost for the measurement period—the portion being the amount attributable to the activity carried out to that date.

All 14 IASB members agreed with these decisions.

Discount rates—Application guidance (Agenda Paper 22C)

The IASB tentatively decided to propose:

1. clarifying that the time value of money reflected in the discount rate for a provision is represented by a risk-free rate; and
2. providing no further application guidance on estimating the time value of money.

All 14 IASB members agreed with these decisions.

Discount rates—Disclosure requirements (Agenda Paper 22D)

The IASB tentatively decided to propose requiring an entity to disclose, for each class of provision:

1. the rate or rates used in measuring the provision; and
2. the approach used to determine those rates.

All 14 IASB members agreed with decision (a) and 13 of 14 IASB members agreed with decision (b).

Next step

The IASB will continue to discuss proposals for amendments to IAS 37. 

Updating the Subsidiaries without Public Accountability: Disclosures Standard (Agenda Paper 32)

The IASB met on 25 April 2024 to discuss the catch-up exposure draft it plans to publish after issuing IFRS 19 Subsidiaries without Public Accountability: Disclosures in May 2024. 

Effective date and transition (Agenda Paper 32A)

The IASB discussed the effective date and transition requirements of the proposed amendments to IFRS 19.

The IASB tentatively decided:

1. to require an eligible subsidiary to apply the proposed amendments to IFRS 19 on 1 January 2027, the same effective date as the Standard itself; and
2. to permit an eligible subsidiary to adopt the proposed amendments to IFRS 19 earlier than that date.

All 14 IASB members agreed with these decisions.

Due process (Agenda Paper 32B)

The IASB set a 120-day comment period for the catch-up exposure draft.

All 14 IASB members agreed with this decision.

All 14 IASB members confirmed they were satisfied the IASB has complied with the applicable due process requirements and has undertaken sufficient consultation and analysis to begin the process for balloting the catch-up exposure draft.

No IASB member indicated an intention to dissent from issuing the catch-up exposure draft.

Next step

The IASB will begin the balloting process for the catch-up exposure draft.