Second Comprehensive Review of the IFRS for SMEs Accounting Standard

The IASB met on 22 May 2024 to redeliberate the proposals in the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard.

Proposed revised Section 23 Revenue from Contracts with Customers—Other matters raised in feedback (Agenda Paper 30A)

The IASB tentatively decided:

1. to change the requirement proposed in paragraph 23.14(a)(ii) of the Exposure Draft to match paragraph 21(a)(ii) of IFRS 15 Revenue from Contracts with Customers;
2. not to add the first sentence of paragraph 19 of IFRS 15 to the revised Section 23 proposed in the Exposure Draft;
3. to specify in the revised Section 23 that an SME accounts for a contract with renewal options based on the contract’s expected term for only the purpose of allocating the transaction price;
4. to change the requirements proposed in paragraph 23.11 of the Exposure Draft to match the last sentence of paragraph 11 of IFRS 15;
5. to change the requirements proposed in paragraph 23.42 of the Exposure Draft to match paragraph 49 of IFRS 15; and
6. to change the requirement proposed in paragraph 23.110 of the Exposure Draft to match the first sentence of paragraph 99 of IFRS 15.

The 13 IASB members present agreed with these decisions. One member was absent.

The IASB also tentatively decided to change the requirements for accounting for refund liabilities proposed in the Exposure Draft to use the same level of confidence (highly probable) used in the requirements for accounting for variable consideration and sale with a right of return.

Nine of 14 IASB members agreed with this decision.

Proposed revised Section 23 Revenue from Contracts with Customers—Length and language (Agenda Paper 30B)

The IASB tentatively decided to add to the revised Section 23 the notion of a transformative relationship, as explained in paragraph BC116K of the Basis for Conclusions on IFRS 15 Revenue from Contracts with Customers.

All 14 IASB members agreed with this decision.

Section 9 Consolidated and Separate Financial Statements—Other matter raised in feedback (Agenda Paper 30C)

The IASB tentatively decided to confirm its proposed amendment in the Exposure Draft that would require an SME to disclose the portion of the gain or loss resulting from the measurement of any investment retained in a former subsidiary at its fair value at the date when control is lost. 

All 14 IASB members agreed with this decision.

Disclosure requirements—IFRS for SMEs Accounting Standard and IFRS 19 Subsidiaries without Public Accountability: Disclosures (Agenda Paper 30D)

The IASB tentatively decided:

1. to add a requirement to Section 11 Financial Instruments for an SME to disclose a maturity analysis for financial liabilities (based on paragraph 39 of IFRS 7 Financial Instruments: Disclosures);
2. to withdraw paragraph 6.3A of the Exposure Draft, which proposed to require an SME to disclose dividends paid (in aggregate or per share) separately for ordinary shares and other shares;  
3. to add a requirement for an SME to disclose (based on paragraph 137 of IAS 1 Presentation of Financial Statements):
   1. the amount of dividends proposed or declared before the financial statements were authorised for issue, but not recognised as a distribution to owners during the period, and the related amount per share; and 
   2. the amount of any cumulative preference dividends not recognised; and
4. to add a requirement to Section 28 Employee Benefits for an SME to disclose expected contributions to a defined benefit plan for the next annual reporting period (based on paragraph 147(b) of IAS 19 Employee Benefits).  

Nine of 14 IASB members agreed with these decisions.

Transition to the Third edition of the IFRS for SMEs Accounting Standard (Agenda Paper 30E)

The IASB tentatively decided:

1. to proceed with the transition requirements proposed in the Exposure Draft.
2. to add a relief from retrospective application for SMEs applying the amended paragraph 28.19 in Section 28 Employee Benefits. An SME applying the relief would not be required to adjust the carrying amount of assets covered by other sections of the Standard for changes in employee benefit costs that were included in the carrying amount before the date of initial application.

All 14 IASB members agreed with these decisions.