This IASB Update highlights preliminary decisions of the International Accounting Standards Board (Board). Projects affected by these decisions can be found on the work plan. The Board's final decisions on IFRS® Standards, Amendments and IFRIC® Interpretations are formally balloted as set out in the IFRS Foundation's Due Process Handbook

The Board met remotely on 22–23 June 2021.

Work plan overview

Board work plan update (Agenda Paper 8)

The Board met on 22 June 2021 to receive an update on its work plan. The Board was not asked to make any decisions.

Next step

The Board expects to receive the next update on its work plan in the third quarter of 2021.

Research and standard-setting

Equity Method: Identifying the principles in IAS 28 Investments in Associates and Joint Ventures (Agenda Paper 13)

The Board met on 22 June 2021 to continue its discussion on the Equity Method project. The Board discussed:  

  1. the principles identified as underlying IAS 28 Investments in Associates and Joint Ventures; and  
  2. how to develop additional principles to guide how an entity applies the equity method in situations to which none of these underlying principles apply. 

The Board was not asked to make any decisions. 

Next step

At future meetings, the Board will consider how to apply the underlying principles in response to specific questions.

Goodwill and Impairment (Agenda Paper 18)

The Board met on 23 June 2021 to redeliberate the objective and scope of its Goodwill and Impairment project. 

The Board tentatively decided to: 

  1. leave the objective of the project unchanged from that described in the Discussion Paper Business Combinations—Disclosures, Goodwill and Impairment. The objective is to explore whether entities can, at a reasonable cost, provide users of financial statements with more useful information about the acquisitions those entities make. 
  2. make no changes to the project’s scope at this stage.  

All Board members agreed with this decision. 

Next step

The Board will continue redeliberating its preliminary views in the Discussion Paper at a future meeting. 

Primary Financial Statements (Agenda Paper 21)

The Board met on 23 June 2021 to redeliberate some of the proposals relating to management performance measures in its Exposure Draft General Presentation and Disclosures. 

Scope of management performance measures (Agenda Paper 21A) 

The Board tentatively decided to include in the scope of its requirements for management performance measures the numerator or denominator of a ratio, if that numerator or denominator meets the definition of a management performance measure. Twelve of 13 Board members agreed with this decision. 

The Board also tentatively decided not to explore expanding the scope of management performance measures to include: 

  1. measures based on line items presented in the statements of financial performance. Ten of 13 Board members agreed with this decision.
  2. measures based on the cash flow statement. Ten of 13 Board members agreed with this decision.
  3. measures based on the statement of financial position. Eleven of 13 Board members agreed with this decision. 
  4. ratios. Eleven of 13 Board members agreed with this decision. 

Next step

The Board will continue to redeliberate the project proposals at future meetings. 

Maintenance and consistent application

Initial Application of IFRS 17 and IFRS 9—Comparative Information (Agenda Paper 2)

The Board met on 22 June 2021 to discuss a proposed narrow-scope amendment to IFRS 17 Insurance Contracts to address one-time classification differences that may arise in the comparative information that insurance entities present on initial application of IFRS 17 and IFRS 9 Financial Instruments.

The Board tentatively decided to propose a narrow-scope amendment to IFRS 17. The amendment would permit an entity to apply a classification overlay in the comparative periods presented on initial application of IFRS 17 and IFRS 9. The optional classification overlay would: 

  1. apply to financial assets that are related to insurance contract liabilities and to which IFRS 9 has not been applied in the comparative periods;
  2. allow an entity to classify these financial assets in the comparative periods based on a reasonable expectation of how these assets would be classified on initial application of IFRS 9;
  3. apply to comparative periods that have been restated for IFRS 17 (that is, from the transition date to the date of initial application of IFRS 17); and
  4. apply on an instrument-by-instrument basis. 

All 13 Board members agreed with this decision and confirmed they were satisfied the Board has complied with the applicable due process requirements to begin the process of balloting the proposed amendment to IFRS 17.

The Board decided to set a comment period of 60 days for the exposure draft. Twelve of 13 Board members agreed with this decision. (On 16 June 2021 the Due Process Oversight Committee approved a shortened comment period.)  

No Board member indicated an intention to dissent from the proposed amendment to IFRS 17.

Next step

The Board expects to publish the exposure draft of the proposed amendment to IFRS 17 in July 2021.

Maintenance and consistent application (Agenda Paper 12)

The Board met on 23 June 2021 to consider supplier finance arrangements, the classification of debt as current or non-current and two matters discussed at the June IFRS Interpretations Committee (Committee) meeting.  

Supplier Finance Arrangements: Whether to undertake narrow-scope standard-setting (Agenda Paper 12A) 

The Board discussed what it had heard from investors and analysts, the Committee and other stakeholders about investor information needs related to supplier finance arrangements (such as reverse factoring and similar arrangements). 

Whether to undertake narrow-scope standard-setting 

The Board tentatively decided to add a narrow-scope standard-setting project to its work plan to meet these investor information needs. 

Eleven of the 12 Board members present agreed with this decision. One member was absent. 

Disclosure scope, objectives and requirements 

The Board tentatively decided that the project would develop disclosure requirements for supplier finance arrangements, but not go beyond such arrangements (that is, the project would not develop requirements for arrangements an entity enters into to fund either receivables from customers or inventories). 

The Board tentatively decided to explain the type of arrangements to be included within the project’s scope, instead of proposing detailed definitions.    

The Board tentatively decided to propose amending IAS 7 Statement of Cash Flows to add:  

  1. an overall disclosure objective: to help users of financial statements understand the nature, timing, and uncertainty of cash flows arising from supplier finance arrangements; and 
  2. specific disclosure objectives: 
  1. to provide quantitative information that helps users of financial statements determine the effects of supplier finance arrangements on an entity’s financial position and cash flows; and 
  2. to provide qualitative information to help users of financial statements understand the risks that arise from supplier finance arrangements. 

The Board tentatively decided to propose that, to meet the proposed disclosure objectives, entities be required to disclose: 

  1. the key terms and conditions of a supplier finance arrangement; and 
  2. at the start and end of the reporting period: 
  1. the aggregate amount of payables that are part of the arrangement; 
  2. the aggregate amount of the payables disclosed under (i) for which suppliers have already received payment from the finance provider; 
  3. the range of payment terms, expressed in time, of payables disclosed under (i); and
  4. the range of payment terms, expressed in time, of trade payables that do not form part of the arrangement. 

The Board tentatively decided to propose adding supplier finance arrangements as an example within the liquidity risk disclosure requirements in IFRS 7 Financial Instruments: Disclosures

Eleven of the 12 Board members present agreed with these decisions. One member was absent. 

Next step 

At a future meeting the Board will discuss the transition requirements for the proposed amendments, as well as the Board’s compliance with applicable due process steps. 

Classification of Debt with Covenants as Current or Non-current (IAS 1) (Agenda Papers 12B–12C) 

The Board discussed the Committee’s technical analysis and conclusions in the tentative Agenda Decision Classification of Debt with Covenants as Current or Non-current. The tentative Agenda Decision explains how an entity applies the amendments to IAS 1 Presentation of Financial Statements included in Classification of Liabilities as Current or Non-current (2020 amendments) to particular fact patterns. 

The Board also discussed: 

  1. comments from respondents to the tentative Agenda Decision about the outcomes and potential consequences of applying the 2020 amendments to the fact patterns set out in the tentative Agenda Decision; and 
  2. whether to undertake standard-setting in response to new information provided by respondents. 

Classification and disclosure 

The Board tentatively decided to amend IAS 1 so that: 

  1. it specifies that if the right to defer settlement for at least 12 months is subject to an entity complying with conditions after the reporting period, then those conditions would not affect whether the right to defer settlement exists at the end of the reporting period (the reporting date) for the purposes of classifying a liability as current or non-current; and 
  2. for non-current liabilities subject to conditions, an entity is required to disclose information about: 
  1. the conditions (for example, the nature of and date by which the entity must comply with the condition); 
  2. whether the entity would comply with the conditions based on its circumstances at the reporting date; and  
  3. whether and how the entity expects to comply with the conditions by the date on which they are contractually required to be tested. 

Twelve of 13 Board members agreed with this decision. 

Separate presentation 

The Board tentatively decided to amend IAS 1 to require that an entity present separately in its statement of financial position ‘non-current liabilities subject to conditions in the next 12 months’. This line item would include liabilities classified as non-current for which the right to defer settlement for at least 12 months is subject to the entity complying with conditions after the reporting date. 

Ten of 13 Board members agreed with this decision. 

Further clarification 

The Board tentatively decided to amend IAS 1 to clarify that an entity does not have a right to defer settlement at the reporting date when the related liability could become repayable within 12 months: 

  1. at the discretion of the counterparty or a third party (for example, when a loan is callable by the lender at any time without cause); or 
  2. if an uncertain future event occurs (or does not occur) and the event’s occurrence (or non-occurrence) is unaffected by the entity’s future actions (for example, when the liability is a financial guarantee or insurance contract liability). 

Twelve of 13 Board members agreed with this decision. 

Deferral of the effective date of the 2020 amendments 

The Board tentatively decided to amend IAS 1 to defer the effective date of the 2020 amendments to no earlier than 1 January 2024. 

All 13 Board members agreed with this decision. 

Next step 

At a future meeting the Board will discuss the transition requirements for the proposed amendments, as well as the Board’s compliance with applicable due process steps. 

Costs Necessary to Sell Inventories (IAS 2): Finalisation of agenda decision (Agenda Paper 12D) 

The Board discussed whether any Board member objected to Agenda Decision Costs Necessary to Sell Inventories (IAS 2 Inventories). 

No Board member objected to the Agenda Decision.  

Next step 

The Agenda Decision will be published in June 2021 in an addendum to IFRIC Update June 2021.  

Preparation of Financial Statements when an Entity is No Longer a Going Concern (IAS 10): Finalisation of agenda decision (Agenda Paper 12E) 

The Board discussed whether any Board member objected to Agenda Decision Preparation of Financial Statements when an Entity is No Longer a Going Concern (IAS 10 Events after the Reporting Period).  

No Board member objected to the Agenda Decision.  

Next step 

The Agenda Decision will be published in June 2021 in an addendum to IFRIC Update June 2021.  

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