Non-current Liabilities with Covenants (Amendments to IAS 1)

The Board met on 20 July 2021 to consider the classification of debt as current or non-current, supplier finance arrangements and matters discussed at the June 2021 IFRS Interpretations Committee (Committee) meeting.

Classification of Debt with Covenants as Current or Non-current (IAS 1): Transition, Early Application and Due Process (Agenda Paper 12A) 

The Board discussed requirements for the transition to, and early application of, the proposed amendments to IAS 1 Presentation of Financial Statements. The Board also discussed due process, including permission to begin the balloting process. 

The proposed amendments to IAS 1 would: 

1. modify the requirements introduced by Classification of Liabilities as Current or Non-current (2020 amendments) on how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances; and
2. defer the effective date of the 2020 amendments to no earlier than 1 January 2024.

Transition 

The Board tentatively decided to: 

1. require entities to apply the proposed amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; and
2. provide no exemption for first-time adopters. 

All 12 Board members agreed with these decisions. 

Early application 

The Board tentatively decided to permit an entity to apply the proposed amendments earlier than the effective date. 

All 12 Board members agreed with this decision. 

Due process 

The Board tentatively decided to allow a comment period of no fewer than 120 days for the exposure draft of its proposed amendments to IAS 1. All 12 Board members agreed with this decision. 

All 12 Board members confirmed they were satisfied the Board has complied with the applicable due process requirements and has undertaken sufficient consultation and analysis to begin the process for balloting the exposure draft. 

Two Board members indicated an intention to dissent from the proposals in the exposure draft. 

Next step 

The Board plans to publish the exposure draft in the fourth quarter of 2021. 

Supplier Finance Arrangements: Transition, Early Application and Due Process (Agenda Paper 12B) 

The Board discussed requirements for the transition to, and early application of, the proposed amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures. The Board also discussed due process, including permission to begin the balloting process. 

Transition 

The Board tentatively decided to: 

1. require entities to apply the proposed amendments retrospectively in accordance with IAS 8; and 
2. provide no exemption for first-time adopters. 

All 12 Board members agreed with these decisions. 

Early application 

The Board tentatively decided to permit an entity to apply the proposed amendments earlier than the effective date. 

All 12 Board members agreed with this decision. 

Due process 

The Board tentatively decided to allow a comment period of no fewer than 120 days for the exposure draft of its proposed amendments to IAS 7 and IFRS 7. All 12 Board members agreed with this decision. 

All 12 Board members confirmed they were satisfied the Board 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 Board member indicated an intention to dissent from the proposals in the exposure draft. 

Next step 

The Board plans to publish the exposure draft in the fourth quarter of 2021. 

IFRIC Update (Agenda Paper 12C) 

The Board received an update on the Committee’s June 2021 meeting. Details of this meeting were published in IFRIC Update June 2021. 

The Board was not asked to make any decisions.