IASB Update December 2023

Work plan overview

IASB work plan update (Agenda Paper 8)

The IASB met on 13 December 2023 to discuss:

• an update on its work plan; and
• the timing of the post-implementation reviews (PIRs) of IFRS 16 Leases and of the hedge accounting requirements of IFRS 9 Financial Instruments.

IASB work plan update (Agenda Paper 8)

The IASB received an update on its work plan. The IASB was not asked to make any decisions.

Timing of the post-implementation reviews of IFRS 16 Leases and of hedge accounting requirements of IFRS 9 Financial Instruments (Agenda Paper 8A)

The IASB discussed the timing of its PIRs of IFRS 16 and of the hedge accounting requirements of IFRS 9.

The IASB decided:

1. to begin the PIR of IFRS 16 in the second quarter of 2024.
   Ten of 14 IASB members agreed with this decision.
2. to consider when to begin the PIR of the hedge accounting requirements of IFRS 9 after the IASB concludes its work on power purchase agreements.
   All 14 IASB members agreed with this decision.

Next steps

The IASB expects to receive the next update on its work plan in the next three to four months.

Research and standard-setting

Rate-regulated Activities (Agenda Paper 9)

The IASB met on 14 December 2023:

• to redeliberate the proposals on the unit of account and on offsetting of regulatory assets and regulatory liabilities for presentation purposes in the Exposure Draft Regulatory Assets and Regulatory Liabilities (Agenda Paper 9A).
• to redeliberate the presentation proposals set out in paragraphs 67–68 and 70 of the Exposure Draft and the proposed amendments to IAS 1 Presentation of Financial Statements set out in Appendix D of the Exposure Draft (Agenda Paper 9B).
• to discuss its plan to redeliberate other proposals in the Exposure Draft. Those proposals relate to items affecting regulated rates only when related cash is paid or received (Agenda Paper 9C). The IASB was not asked to make any decisions on the plan.
• to redeliberate a specific topic included in the plan. This topic relates to the measurement and presentation of items affecting regulated rates only when related cash is paid or received—set out in paragraphs 59–66 and 69 of the Exposure Draft (Agenda Paper 9D).

Unit of account and offsetting (Agenda Paper 9A)

The IASB tentatively decided that the prospective Accounting Standard on Rate-regulated Activities (prospective RRA Standard) would:

1. clarify that the unit of account is the right or obligation arising from a difference in timing or from a group of differences in timing. The differences in timing included in that group would:
   1. be created by the same regulatory agreement;
   2. have similar expiry patterns; and
   3. be subject to similar risks.
2. omit the proposal in paragraph 71 of the Exposure Draft that would have permitted an entity to offset regulatory assets and regulatory liabilities in the statement of financial position.

All 14 IASB members agreed with these decisions.

Presentation (Agenda Paper 9B)

The IASB tentatively decided that the prospective RRA Standard would:

1. require an entity to classify all regulatory income minus all regulatory expense (regulatory income or regulatory expense) as revenue.
2. require an entity to present regulatory income or regulatory expense as a separate line item in the statement(s) of financial performance.
3. omit the proposed amendment to paragraph 82 of IAS 1 that would have required an entity to present regulatory income or regulatory expense as a separate line item immediately below revenue.
4. retain the proposals to require an entity to include regulatory interest income within regulatory income and regulatory interest expense within regulatory expense.
5. amend the prospective IFRS Accounting Standard Presentation and Disclosure in Financial Statements (prospective PFS Standard) to clarify that regulatory interest is classified in the operating category.
6. retain the proposal to require an entity to present in its statement of financial position:
   1. line items for regulatory assets and regulatory liabilities; and
   2. current and non-current regulatory assets and current and non-current regulatory liabilities as separate classifications by applying paragraphs 66 and 69 of IAS 1, except when the entity presents all assets and liabilities in order of liquidity.

All 14 IASB members agreed with decisions (a) and (c)–(f) and nine of 14 IASB members agreed with decision (b).

Items affecting regulated rates on a cash basis (Agenda Paper 9D)

The IASB tentatively decided that the prospective RRA Standard would:

1. retain the proposed concept that differences in timing that arise from differences between regulatory and accounting criteria represent enforceable present rights or enforceable present obligations. Those rights or obligations meet the proposed definitions of regulatory assets and regulatory liabilities.
2. retain the measurement requirements proposed in paragraph 61 of the Exposure Draft for items that affect regulated rates only when related cash is paid or received.
3. retain the requirements proposed in paragraph 69 of the Exposure Draft to present specified regulatory income and regulatory expense in other comprehensive income.
4. clarify that an entity is required to reclassify regulatory income or regulatory expense presented in other comprehensive income to profit or loss if IFRS Accounting Standards require the entity to reclassify the related expense or income to profit or loss.
5. include no additional presentation requirements for other comprehensive income. An entity would apply the requirements in IAS 1 or the prospective PFS Standard.

Thirteen of 14 IASB members agreed with decision (a), 11 of 14 IASB members agreed with decision (b) and 12 of 14 IASB members agreed with decisions (c)–(e).

Next step

The IASB will continue to redeliberate the project proposals.

Management Commentary (Agenda Paper 15)

The IASB met on 12 December 2023 to receive an update on the project. 

The IASB was not asked to make any decisions. 

Next steps

The IASB will meet with the International Sustainability Standards Board (ISSB) to discuss feedback on a potential project on integration in reporting, which was described in the ISSB Consultation on Agenda Priorities.

The IASB will then discuss the direction of the Management Commentary project.

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

The IASB met on 13 December 2023 to redeliberate the proposals in the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard (Exposure Draft).

Fair value measurement (Agenda Paper 30A)

The IASB tentatively decided:

1. to finalise the proposals in the Exposure Draft to introduce a new Section 12 Fair Value Measurement without significant changes to the overall content proposed for that section;
2. to consider respondents’ drafting suggestions and whether plainer language can be used to express requirements in Section 12;
3. to omit the proposed appendix to Section 12, and instead to include its examples in separate educational material; and
4. to consider respondents’ suggestions for additional guidance and illustrative examples when updating the separate educational material.

All 14 IASB members agreed with these decisions.

Investment entities (Agenda Paper 30B)

The IASB tentatively decided not to add requirements for investment entities to Section 9 Consolidated and Separate Financial Statements of the IFRS for SMEs Accounting Standard.

All 14 IASB members agreed with this decision.

Requirement to offset equity instruments (Agenda Paper 30C)

Paragraph 22.7(a) of the IFRS for SMEs Accounting Standard requires that if equity instruments are issued before an entity receives the cash or other resources, the entity shall present the amount receivable as an offset to equity in its statement of financial position, not as an asset. The IASB tentatively decided to retain this paragraph in the Accounting Standard but to provide relief from applying this requirement if it conflicts with legislation in an entity’s jurisdiction.

Thirteen of 14 IASB members agreed with this decision.

Next step

The IASB will continue to redeliberate the proposals in the Exposure Draft.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures (Agenda Paper 31)

The IASB met on 13 December 2023 to discuss the prospective IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures (prospective Subsidiaries Standard).

The IASB agreed an approach to update the disclosure requirements proposed in the Exposure Draft Subsidiaries without Public Accountability: Disclosures in the light of the prospective IFRS Accounting Standard Presentation and Disclosure in Financial Statements (prospective PFS Standard) replacing IAS 1 Presentation of Financial Statements.

In addition, the IASB tentatively decided to change the disclosure requirements proposed in the Exposure Draft by:

1. omitting from the prospective Subsidiaries Standard guidance on applying the disclosure requirements in paragraphs 78, 98, 114 and 117 of IAS 1 (that are expected to be included in the prospective PFS Standard);
2. omitting from the prospective Subsidiaries Standard the presentation requirement in paragraph 106(d) of IAS 1 (that is expected to be included in the prospective PFS Standard); and
3. including in the prospective Subsidiaries Standard paragraph 128 of IAS 1 (that is expected to be included in the prospective PFS Standard).

All 14 IASB members agreed with these decisions.

Next step

The IASB will discuss any further sweep issues that arise in the drafting process.

Maintenance and consistent application

Power Purchase Agreements (Agenda Paper 3)

The IASB met on 12 December 2023 to hear a summary of staff research and to discuss its approach to narrow-scope standard-setting.

The IASB tentatively decided:

1. to undertake narrow-scope standard-setting to amend IFRS 9 Financial Instruments, with the next project milestone to be an exposure draft; and
2. to explore an approach to this standard-setting that includes amending the ‘own use’ and hedge accounting requirements in IFRS 9.

All 14 IASB members agreed with this decision.

Next step

The IASB will discuss possible amendments to IFRS 9.  

Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity (Agenda Paper 12) 

The IASB met on 12 December 2023 to discuss a recommendation from the IFRS Interpretations Committee to add a maintenance project for developing narrow-scope amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates to its work plan. The amendments would specify how to translate the results and financial position of an entity whose functional currency is non-hyperinflationary into a hyperinflationary presentation currency.

The IASB decided to add the maintenance project to its work plan.

Thirteen of 14 IASB members agreed with this decision.

The IASB tentatively decided to propose amending IAS 21 to require an entity to translate all amounts (assets, liabilities, equity items, income and expenses, including comparative amounts) at the closing rate at the date of the most recent statement of financial position if that entity:

1. has a non-hyperinflationary functional currency and presents financial statements in a hyperinflationary presentation currency; or
2. translates the results and financial position of a foreign operation that has a non-hyperinflationary functional currency into a hyperinflationary presentation currency.

All 14 IASB members agreed with this decision.

Next step

The IASB will discuss possible disclosure and transition requirements.

Climate-related and Other Uncertainties in the Financial Statements (Agenda Paper 14)

The IASB met on 13 December 2023 to discuss the status of and next steps for the project.

The IASB was not asked to make any decisions.

Next step

The IASB will continue to discuss possible targeted actions to improve the application of IFRS Accounting Standards to climate-related and other uncertainties.

Provisions—Targeted Improvements (Agenda Paper 22)

The IASB met on 13 December 2023 to discuss its project to make targeted amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

The IASB decided:

1. to continue developing proposed amendments; and
2. to set the publication of an exposure draft as the next project milestone.

All 14 IASB members agreed with this decision.

Next step

The IASB will continue to discuss possible amendments to IAS 37.

Addendum to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard (Agenda Paper 29)

The IASB met on 14 December 2023 to discuss this project.

Following its tentative decision in October 2023 to expose for public comment a proposal to align the IFRS for SMEs Accounting Standard with the requirements in full IFRS Accounting Standards for supplier finance arrangements and lack of exchangeability, the IASB discussed:

• proposed amendments to the IFRS for SMEs Accounting Standard to effect that alignment; and
• due process steps—including permission to begin the balloting process—for the Exposure Draft Addendum to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard (Addendum Exposure Draft).

The IASB tentatively decided to propose amendments to the IFRS for SMEs Accounting Standard to align:

1. Section 7 Statement of Cash Flows with IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures, as amended by Supplier Finance Arrangements; and
2. Section 30 Foreign Currency Translation with IAS 21 The Effects of Changes in Foreign Exchange Rates, as amended by Lack of Exchangeability.
   

All 14 IASB members agreed with these decisions.

The IASB tentatively decided to propose:

1. that the amended and revised Section 7 and Section 30 of the IFRS for SMEs Accounting Standard have the same effective date as that of the third edition of the IFRS for SMEs Accounting Standard;
2. no transition reliefs in relation to the amendments to Section 7 of the Accounting Standard; and
3. the same transition reliefs in relation to the amendments to Section 30 of the Standard as were provided by Lack of Exchangeability.

All 14 IASB members agreed with these decisions.

The IASB decided to set a comment period of 120 days for the Addendum Exposure Draft.

All 14 IASB members agreed with this decision.

All 14 IASB members confirmed they were satisfied the IASB has complied with the applicable due process requirements and has undertaken sufficient consultation and analysis to begin the process for balloting the Addendum Exposure Draft.

No IASB member indicated an intention to dissent from the proposals in the Addendum Exposure Draft.

Next step

The IASB plans to publish the Addendum Exposure Draft in the first half of 2024.