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 23–24 March 2021.

Work plan overview

Board work plan update (Agenda Paper 8)

The Board met on 23 March 2021 to discuss proposals to adjust the timetables for some of its published and forthcoming consultation documents.

The Board decided to extend the comment periods for:

  1. the Exposure Draft Regulatory Assets and Regulatory Liabilities—by 30 days to end on 30 July 2021;
  2. the forthcoming exposure draft on the Disclosure Initiative—Targeted Standards-level Review of Disclosures project—from 180 days to 210 days; and
  3. the forthcoming request for information on the Third Agenda Consultation—from 120 days to 180 days.

Eleven of 13 Board members agreed with this decision.

Research and standard-setting

Equity Method (Agenda Paper 13)

The Board met on 23 March 2021 to receive an update on the Equity Method research project.

The update summarised the current status of the project, and detailed the process for selecting application questions to be addressed by the project.

The Board was not asked to make any decisions.

Next step

At a future meeting the Board will review the list of application questions and discuss identified principles in IAS 28 Investments in Associates and Joint Ventures.

Management Commentary (Agenda Paper 15)

The Board met on 23 March 2021 to discuss the comment period for the forthcoming exposure draft of the revised IFRS Practice Statement 1 Management Commentary.

The Board decided that the comment period should be more than 120 days but no more than 180 days, with the comment deadline set to avoid conflicting with the comment deadlines for the Board’s other major consultations.

Next step

The Board currently plans to publish the exposure draft around the end of April 2021. However, the IFRS Foundation Trustees intend to publish for public comment proposed changes to the Foundation’s Constitution that are necessary to establish a board for setting sustainability reporting standards. Depending on when the Trustees publish those proposals, the Board may postpone publication of the management commentary exposure draft by a few weeks.

Goodwill and Impairment (Agenda Paper 18)

The Board met on 23 March 2021 to discuss feedback on its Discussion Paper Business Combinations—Disclosures, Goodwill and Impairment. The Discussion Paper set out the Board’s preliminary views on whether entities can, at a reasonable cost, provide better information about business combinations to users of financial statements. The Discussion Paper included the Board’s preliminary views on disclosure of information and on accounting for goodwill.

The Board was not asked to make any decisions.

Next step

The Board will continue discussing feedback on the Discussion Paper at its next meeting.

Primary Financial Statements (Agenda Paper 21)

The Board met on 24 March 2021 to begin redeliberating the proposals in the Exposure Draft General Presentation and Disclosures relating to:

  • subtotals and categories in the statement of profit or loss, by discussing the requirement for, and the definition of, operating profit—Agenda Paper 21A;
  • management performance measures, including the potential expansion of their scope beyond income and expense subtotals—Agenda Paper 21B; and
  • amendments to the statement of cash flows, including the scope of amendments and some of the specific proposals—Agenda Paper 21C.

Subtotals in the statement of profit or loss—operating profit (Agenda Paper 21A)

The Board tentatively decided to:

  1. require an entity to present an operating profit subtotal in the statement of profit or loss. All 13 Board members agreed with this decision.
  2. confirm these types of income and expenses shall not be classified in the operating category:
    1. investing;
    2. financing;
    3. income tax; and
    4. discontinued operations.

    All 13 Board members agreed with this decision. The Board will discuss at a future meeting the precise definition of the investing and financing categories including how they apply to entities for which investing and financing are main business activities (such as banks and other financial institutions).

  3. confirm that the operating category:
    1. comprises all income and expenses arising from an entity’s operations, including volatile and unusual income and expenses arising from an entity’s operations; and
    2. includes, but is not limited to, income and expenses from an entity’s main business activities.

    All 13 Board members agreed with this decision.

  4. not develop a direct definition of operating profit.
    All 13 Board members agreed with this decision.

Scope of management performance measures (Agenda Paper 21B)

The Board tentatively decided to:

  1. require an entity to include information about management performance measures in the financial statements. All 13 Board members agreed with this decision.
  2. explore possible approaches to expanding the scope of the requirements relating to management performance measures to include measures other than subtotals of income and expenses. Ten of 13 Board members agreed with this decision.

The Board also discussed possible approaches for expanding the scope of management performance measures and factors for evaluating them. The Board was not asked to make any decisions.

Statement of cash flows (Agenda Paper 21C)

The Board tentatively decided to:

  1. maintain the scope of its work relating to the statement of cash flows in this project. All 13 Board members agreed with this decision.
  2. require an entity to use the operating profit or loss subtotal as the starting point for the indirect method of reporting cash flows from operating activities. All 13 Board members agreed with this decision.
  3. proceed with the proposals in the Exposure Draft relating to the classification of interest paid and dividend cash flows for entities other than those for which investing and financing are main business activities. Accordingly:
    1. interest and dividends paid would be classified as cash flows arising from financing activities; and
    2. dividends received would be classified as cash flows arising from investing activities.

    All 13 Board members agreed with this decision. The Board will discuss the classification of interest received at a future Board meeting when it will also discuss definitions of investing and financing in the statement of profit or loss.

Next step

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

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

The Board met on 24 March 2021 to discuss the project plan for the second phase of the Second Comprehensive Review of the IFRS for SMEs Standard.

The Board tentatively decided to:

  • move the project from its research programme to its standard-setting work plan.
  • confirm that the scope of the review is as set out in the Request for Information Comprehensive Review of the IFRS for SMEs Standard.
  • work towards publishing an exposure draft, proposing amendments to the IFRS for SMEs Standard for new requirements that are in the scope of the Review.
  • develop proposed amendments to the IFRS for SMEs Standard using the approach on which the Board consulted in the Request for Information. This approach treats alignment with IFRS Standards as the starting point, and applies the principles of relevance to SMEs, simplicity and faithful representation, including the assessment of costs and benefits, in determining whether and how that alignment should take place.

Twelve of 13 Board members agreed with these decisions.

Next step

The Board will start to deliberate the project proposals at a future meeting.

Maintenance and consistent application

Maintenance and consistent application (Agenda Paper 12)

The Board met on 23 March 2021 to receive an update on the February 2021 meeting of the IFRS Interpretations Committee. Details of this meeting were published in the IFRIC Update for February 2021.

The Board was not asked to make any decisions.