This IASB Update highlights preliminary decisions of the International Accounting Standards Board (Board). The Board's final decisions on IFRS® Standards, Amendments and IFRIC® Interpretations are formally balloted as set forth in the IFRS Foundation and IFRS Interpretation Committee Due Process Handbook.
The Board met in public on Wednesday 21 and Thursday 22 June 2017 at the IFRS Foundation's offices in London, UK.
The topics for discussion were:
The Board discussed a draft description in the Conceptual Framework of the boundary of a reporting entity that is not a legal entity. The description was developed in response to a tentative decision made at the September 2016 Board meeting.
The Board was satisfied with the direction of the drafting but decided to emphasise further that the information needs of users of financial statements play an important role in establishing the boundary of a reporting entity that is not a legal entity.
The Board discussed an issue that has arisen in drafting an exposure draft for proposed amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (ED). The Board decided to include in the ED a proposal to delete ‘IG Example 3—Prospective application of a change in accounting policy when retrospective application is not practicable’ from the Guidance on Implementing IAS 8.
All 13 Board members agreed with this recommendation.
The Board expects to publish the ED in the third quarter of 2017.
The Board met on 21 June 2017 to discuss the Primary Financial Statements project. The Board continued its discussion from the March 2017 Board meeting about introducing two subtotals in the statement(s) of financial performance—earnings before finance income/expenses and tax (EBIT) and a management performance measure.
No decisions were made at this meeting.
The staff will consider the feedback received by the Board and bring back revised proposals to a future meeting.
The Board met on 21 June 2017 to consider examples that demonstrate the operation of a possible accounting model for activities subject to ‘defined rate regulation’. The model recognises assets and liabilities that reflect rights and obligations arising from a rate-adjustment mechanism in a regulatory agreement.
Defined rate regulation establishes a basis for setting the regulated rate an entity can charge its customers for specified goods or services. That basis includes a rate-adjustment mechanism that gives the entity a right to increase the regulated rate for a future period, or an obligation to decrease that rate, to:
The Board also received Agenda Paper 9A, a summary of discussions to date, for information only.
The Board discussed five examples that demonstrate common types of regulated rate adjustments. Each example shows how the model would recognise a regulatory asset or regulatory liability, together with a related regulated rate adjustment recognised in profit or loss. For each example, the Board considered the staff’s conclusions about:
Eleven Board members agreed with the staff’s conclusions about the examples, and one disagreed. One Board member was absent.
The Board plans to discuss further aspects of the model at its July meeting.
The Board met on 22 June 2017 to discuss implementation and maintenance projects.
The Board continued to discuss the proposed amendments to IAS 28 Investments in Associates and Joint Ventures. Specifically, it discussed transition requirements for first-time adopters and due process steps. The Board tentatively decided not to provide first-time adopters with any transition requirements other than those already included in IFRS 1 First-time Adoption of International Financial Reporting Standards.
Twelve of 13 Board members agreed with this decision and one member was absent.
Twelve of 13 Board members agreed that the Board has completed the necessary due process steps for the project and instructed staff to begin the balloting process for issuing the amendments to IAS 28. One member was absent.
One Board member indicated his intention to dissent from the decision to issue the amendments to IAS 28.
The Board expects to issue the amendments to IAS 28 in September 2017.
The Board discussed whether, and if so how, to address the challenges posed by the requirements in IAS 8 for voluntary changes in accounting policies—in particular, changes in accounting policies that result from agenda decisions published by the IFRS Interpretations Committee. Specifically, the Board considered whether it should provide further exceptions in IAS 8 for retrospective application of voluntary changes in accounting policies, either for all voluntary changes in accounting policies or only for those changes that result from agenda decisions.
The Board tentatively decided to amend IAS 8 to lower the impracticability threshold regarding retrospective application of voluntary changes in accounting policies that result from agenda decisions. The proposed threshold would include a consideration of the benefits and costs of applying the change retrospectively.
Eight of 13 Board members agreed with this decision and three members disagreed. One member abstained and one was absent.
The Board also tentatively decided not to address whether a change that results from an agenda decision is the correction of an error or a voluntary change in an accounting policy. Eleven of 13 Board members agreed and one disagreed with this decision; one member was absent.
The Board will discuss the proposed new threshold at a future meeting.
The Board met on 22 June 2017 to consider feedback from the comment letters on the Exposure Draft Prepayment Features with Negative Compensation (proposed amendments to IFRS 9).
The Board also considered issues that need to be discussed in the redeliberation of the proposed amendments to IFRS 9.
The Board was not asked to make any decisions.
The Board redeliberation will take place at the July Board meeting.
The Board met on 22 June 2017 to view a presentation on the Dynamic Risk Management research project. The educational presentation included information on:
The Board was not asked to make any decisions.
The Board will continue deliberations.
The Board met on 22 June 2017 to resume discussions on the comments received on the Exposure Draft Definition of a Business and Accounting for Previously Held Interests (ED).
The Board tentatively decided to:
Twelve of 13 Board members agreed with these decisions and one was absent.
In addition, the Board tentatively decided to align the definition of a business in Appendix A of IFRS 3 with the revised definition of output in paragraph B7(c) of IFRS 3.
Nine of 13 Board members agreed and three disagreed with this decision; one member was absent.
The Board also tentatively decided:
Ten of 13 Board members agreed and two disagreed with this decision; one member was absent.
The Board will discuss a comparison between the FASB Accounting Standards Update 2017–01 Clarifying the Definition of a Business and the draft amendments to IFRS 3 at a future meeting. At that meeting, the Board will receive a request from staff for permission to begin drafting the final amendments.
The work plan reflecting decisions made at this meeting was updated on the IFRS Foundation website on 23 June 2017. View it here.