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 out in the Due Process Handbook of the IFRS Foundation and the IFRS Interpretation Committee.
The Board met remotely on 14–16 December 2020.
The topics, in order of discussion, were as follows:
Contents
Research and standard-setting
- Second Comprehensive Review of the IFRS for SMEs Standard (Agenda Paper 30)
- Primary Financial Statements (Agenda Paper 21)
- Post-implementation Review of IFRS 9—Classification and Measurement (Agenda Paper 3)
- Disclosure Initiative—Subsidiaries that are SMEs (Agenda Paper 31)
- Financial Instruments with Characteristics of Equity (Agenda Paper 5)
- Pension Benefits that Vary with Asset Returns (Agenda Paper 6)
Maintenance and consistent application
Research and standard-setting
Second Comprehensive Review of the IFRS for SMEs Standard (Agenda Paper 30)
The Board met on 14 December 2020 to discuss key messages from its outreach events, online surveys and a preliminary analysis of the comment letters on its Request for Information Comprehensive Review of the IFRS for SMEs Standard.
The Board tentatively decided to ask the SME Implementation Group (SMEIG) to:
- discuss a comprehensive summary of feedback on the Request for Information; and
- recommend what the Board should do next in its second comprehensive review of the IFRS for SMEs Standard.
All 13 Board members agreed with this decision.
Next step
At a future meeting the Board will consider any recommendations developed by the SMEIG on what the Board should do next in its second comprehensive review of the IFRS for SMEs Standard.
Primary Financial Statements (Agenda Paper 21)
The Board met on 15 December 2020 and 16 December 2020 to discuss feedback on its Exposure Draft General Presentation and Disclosures. The Exposure Draft sets out proposals for an IFRS Standard on presentation and disclosures in financial statements that, when finalised, would replace IAS 1 Presentation of Financial Statements. It also sets out proposed amendments to other IFRS Standards.
The Board was not asked to make decisions.
Next step
The Board will continue discussing feedback on the Exposure Draft and will discuss plans for redeliberating the project proposals at the next meeting.
Post-implementation Review of IFRS 9—Classification and Measurement (Agenda Paper 3)
The Board met on 16 December 2020 to discuss objectives, activities and an expected time line for the first phase of the Post-implementation Review of the classification and measurement requirements in IFRS 9 Financial Instruments.
The Board was not asked to make any decisions.
Next step
The Board plans to perform outreach in the first half of 2021 to assist the Board in identifying matters on which it will consult publicly in a Request for Information. The Board expects to publish the Request for Information in the third quarter of 2021.
Disclosure Initiative—Subsidiaries that are SMEs (Agenda Paper 31)
The Board met on 16 December 2020 to discuss:
- possible reduced-disclosure requirements for insurance contracts—Agenda Paper 31A;
- transition to the reduced-disclosure IFRS Standard—Agenda Paper 31B; and
- scope of the reduced-disclosure IFRS Standard—Agenda Paper 31C.
IFRS 17 Insurance Contracts (Agenda Paper 31A)
The Board tentatively decided that, should it propose a reduced-disclosure IFRS Standard for subsidiaries, the consultation document should not propose reduced-disclosure requirements for insurance contracts in the scope of IFRS 17. The Board will seek views on this decision as part of its consultation. Nine of the 12 Board members present agreed with this decision. One member was absent.
Transition to the reduced-disclosure IFRS Standard (Agenda Paper 31B)
The Board tentatively decided that, should it propose a reduced-disclosure IFRS Standard for subsidiaries:
- it would not propose amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards or include transition provisions in the reduced-disclosure IFRS Standard;
- in the first financial statements in which a subsidiary ceases to apply the reduced-disclosure IFRS Standard and in which it applies IFRS Standards with full disclosures, comparatives will be required for the disclosures not included in the previous years’ financial statements;
- the reduced-disclosure IFRS Standard may be applied for the ‘first time’ more than once by a reporting entity, for example when a subsidiary moves from a reporting group that prepares its financial statements applying IFRS Standards to a group that does not but which then subsequently adopts IFRS Standards; and
- the reduced-disclosure IFRS Standard should clearly state that its application is optional and that an entity’s decision to apply the Standard is reversible.
All 12 Board members present agreed with these decisions. One member was absent.
Scope of the reduced-disclosure IFRS Standard (Agenda Paper 31C)
The Board discussed the scope of a possible reduced-disclosure IFRS Standard for subsidiaries. In particular, the Board discussed whether the scope should be widened beyond subsidiaries that are SMEs.
The Board was not asked to make any decisions.
Next step
In January 2021 the Board will continue its discussions, particularly on the scope of a possible reduced-disclosure IFRS Standard.
Financial Instruments with Characteristics of Equity (Agenda Paper 5)
The Board met on 16 December 2020 to discuss whether to move the Financial Instruments with Characteristics of Equity project from the research programme to the standard-setting programme.
The Board decided to:
- add the Financial Instruments with Characteristics of Equity project to its standard-setting programme; and
- continue using the expertise of advisory bodies instead of establishing a dedicated consultative group for the project.
All 12 Board members present agreed with these decisions. One Board member was absent.
Next step
At future Board meetings, the Board will continue discussing topics included in the project plan that were discussed at the October 2019 Board meeting
Pension Benefits that Vary with Asset Returns (Agenda Paper 6)
The Board met on 16 December 2020 to discuss illustrative examples of applying the capped approach to pension benefits that vary with asset returns. The approach would cap the projection of the cash flows that vary with asset returns at the discount rate specified in IAS 19 Employee Benefits. The Board discussed how the capped approach would affect the outcome of applying the requirements in IAS 19.
Educational session—illustrative examples
The Board considered illustrative examples to compare the accounting outcome under the capped approach with the accounting outcome of applying the requirements in IAS 19.
The Board was not asked to make any decisions.
Next step
In February 2021 the Board expects to complete its review of the research and discuss an initial analysis of how the capped approach could be introduced into IAS 19.
Maintenance and consistent application
Disclosure Initiative—Accounting Policies (Agenda Paper 20)
The Board met on 14 December 2020 to discuss sweep issues arising from the balloting process of Disclosure of Accounting Policies, which will amend IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements.
Sweep issues (Agenda Paper 20)
The Board tentatively decided not to add transition requirements and an effective date to the amendments to IFRS Practice Statement 2.
Seven of 13 Board members agreed with this decision.
The Board tentatively decided that paragraph 117B of IAS 1 should state that accounting policy information is expected to meet the definition of material if the accounting policy information is needed to understand other material information in the financial statements.
All 13 Board members agreed with this decision.
Next step
The Board expects to issue Disclosure of Accounting Policies in the first quarter of 2021.
Supply Chain Financing Arrangements—Reverse Factoring (Agenda Paper 12)
The Board met on 14 December 2020 to discuss whether any Board member objects to the IFRS Interpretations Committee’s decision to publish the agenda decision Supply Chain Financing Arrangements—Reverse Factoring.
No Board member objected to the agenda decision. The agenda decision will therefore be published in the IFRIC Update.
