IASB and joint IASB–ISSB Update January 2024

Research and standard-setting

Post-implementation Review of IFRS 15 Revenue from Contracts with Customers (Agenda Paper 6) 

The IASB met on 23 January 2024 to discuss:

1. a summary of the feedback on the Request for Information Post-implementation Review of IFRS 15 Revenue from Contracts with Customers; and
2. a plan for the next phase of the project.

The IASB was not asked to make any decisions.

Next steps

The IASB will discuss detailed feedback on the Request for Information and expects to finalise its decisions by the third quarter of 2024. In June 2024, the IASB and the FASB meet to share their findings and tentative decisions related to each board’s post-implementation review. At the end of its post-implementation review, the IASB will publish a project report and feedback statement.

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

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

Reconciliation for liabilities arising from financing activities (Agenda Paper 30A)

The IASB tentatively decided to finalise the proposal in the Exposure Draft to require SMEs to disclose a reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities.

All 14 IASB members agreed with this decision.

Agriculture: Bearer plants (Agenda Paper 30B)

The IASB tentatively decided to finalise the proposals for bearer plants in the Exposure Draft. However, the IASB tentatively decided to clarify that Section 34 Specialised Activities of the IFRS for SMEs Accounting Standard does not apply to bearer plants that can be measured separately, on initial recognition and on an ongoing basis, from the produce on them without undue cost or effort.

All 14 IASB members agreed with this decision.

Impairment of financial assets (Agenda Paper 30C)

The IASB tentatively decided that, for a small population of SMEs with significant exposure to credit risk:

1. the relevance principle of the IASB’s alignment approach is satisfied.
   Ten of 14 IASB members agreed with this decision.
2. the population be defined as SMEs that provide financing to customers as one of their primary businesses.
   Ten of 14 IASB members agreed with this decision.
3. the population be required to apply an expected credit loss model.
   Eight of 14 IASB members agreed with this decision.
   

Given these three tentative decisions, the IASB also tentatively decided:

1. to require SMEs that do not provide financing to customers as one of their primary businesses to continue to use the incurred loss model to measure the impairment of their financial assets.
   Twelve of 14 IASB members agreed with this decision.
2. to require SMEs that provide financing to customers as one of their primary businesses to apply an expected credit loss model, aligned with the simplified approach in IFRS 9 Financial Instruments, to measure the impairment of their financial assets.
   Nine of 14 IASB members agreed with this decision.

Section 20 Leases and IFRS 16 Leases (Agenda Paper 30D)

The IASB tentatively decided to consider aligning the IFRS for SMEs Accounting Standard with IFRS 16 Leases at the next comprehensive review of the IFRS for SMEs Accounting Standard.

All 14 IASB members agreed with this decision.

Next steps

The IASB will consider the possible implications of requiring SMEs that provide financing to customers as one of their primary businesses to use an expected credit loss model. The IASB will also continue to redeliberate the proposals in the Exposure Draft.

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

The IASB met on 22 January 2024 to discuss some of the disclosure requirements proposed in the Exposure Draft Subsidiaries without Public Accountability: Disclosures. The IASB tentatively decided:

1. to withdraw the proposed requirements in paragraph 106(d) of the Exposure Draft;
2. to modify the proposed requirements in paragraphs 96, 100(e), 106(f), 147(c) and 191 of the Exposure Draft to align their language with that used in the disclosure requirements in the IFRS Accounting Standards of which these proposed requirements are reduced versions; and
3. to add a disclosure requirement based on paragraph 58 of IFRS 16 Leases.

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 23 January 2024 to discuss potential amendments to the ‘own-use’ and hedge accounting requirements in IFRS 9 Financial Instruments. The purpose of any amendments would be to better reflect how power purchase agreements affect financial statements.

The IASB was not asked to make any decisions.

Maintenance and consistent application (Agenda Paper 12)

The IASB met on 23 January 2024:

• to consider an agenda decision discussed at the November 2023 meeting of the IFRS Interpretations Committee (Committee) (Agenda Paper 12A); and
• to receive an update on that meeting (Agenda Paper 12B).

Merger between a Parent and Its Subsidiary in Separate Financial Statements (IAS 27) (Agenda Paper 12A)

The IASB was asked whether it objected to the Agenda Decision Merger between a Parent and Its Subsidiary in Separate Financial Statements (IAS 27 Separate Financial Statements).

No IASB member objected to the Agenda Decision.

Next step

The Agenda Decision will be published in January 2024 in an addendum to IFRIC Update November 2023.

IFRIC Update November 2023 (Agenda Paper 12B)

The IASB received an update on the Committee’s November 2023 meeting. Details of this meeting were published in IFRIC Update November 2023.

The IASB was not asked to make any decisions.

Amendments to the Classification and Measurement of Financial Instruments (Agenda Paper 16)

The IASB met on 23 January 2024 to discuss the feedback on the Exposure Draft Amendments to the Classification and Measurement of Financial Instruments, which proposed amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures.

The IASB discussed its proposals relating to:

• general requirements for assessing the contractual cash flow characteristics of a financial asset (Agenda Paper 16A); and
• requirements for classifying and measuring financial assets with non-recourse features and contractually linked instruments (Agenda Paper 16B).

General requirements (Agenda Paper 16A)

The IASB tentatively decided to finalise the proposed amendments in the Exposure Draft, subject to revisions, namely:

1. clarifying, in relation to paragraph B4.1.8A of the Exposure Draft, that the amount of compensation that an entity receives may indicate that the entity is being compensated for something other than basic lending risks or costs;
2. instead of requiring that a contingent event should be specific to the debtor, as set out in paragraph B4.1.10A of the Exposure Draft, specifying that, if the nature of a contingent event is not directly related to a change in basic lending risks or costs, a financial asset has contractual cash flows that are solely payments of principal and interest if:
   1. irrespective of the probability of the contingent event occurring, the contractual cash flows before and after any contingent event(s), when considered in isolation, are solely payments of principal and interest; and
   2. the contractual cash flows arising from a contingent event are not significantly different from the cash flows on a similar financial asset without such a contingent event and do not represent an investment in particular assets or cash flows; and
3. updating the analyses of the proposed examples in the Exposure Draft to illustrate the application of the changed requirements.

Thirteen of 14 IASB members agreed with this decision.

Financial assets with non-recourse features and contractually linked instruments (Agenda Paper 16B)

The IASB tentatively decided to finalise the proposed amendments in the Exposure Draft, subject to:

1. requiring, in relation to paragraph B4.1.20A of the Exposure Draft, that the junior debt instrument is held by the debtor (the sponsoring entity) throughout the life of the transaction; and
2. minor drafting suggestions to clarify the proposed amendments.  

All 14 IASB members agreed with this decision.

Next step

The IASB will continue discussing the feedback on the Exposure Draft.

Updating the Subsidiaries without Public Accountability: Disclosures Standard (Agenda Paper 32)

The IASB met on 22 January 2024 to discuss which disclosure requirements to propose in the ‘catch-up’ exposure draft it expects to publish after issuing the prospective IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures.

The IASB tentatively decided to propose including disclosure requirements from: 

1. paragraphs 44G–44H of IAS 7 Statement of Cash Flows, relating to Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7);
2. paragraphs 88A–88D of IAS 12 Income Taxes, relating to International Tax Reform—Pillar Two Model Rules (Amendments to IAS 12); and
3. paragraph 57B of IAS 21 The Effects of Changes in Foreign Exchange Rates and paragraphs A19–A20 of Appendix A to IAS 21, relating to Lack of Exchangeability (Amendments to IAS 21).

All 14 IASB members agreed with this decision.

Next step

The IASB will continue to discuss the ‘catch-up’ exposure draft in February 2024.

Taxonomy

IFRS Accounting Taxonomy Update—Amendments to IAS 12, IAS 21, IAS 7 and IFRS 7 (Agenda Paper 25)

The IASB met on 23 January 2024 to consider:

• feedback on the IFRS Accounting Taxonomy 2023—Proposed Update 1 International Tax Reform—Pillar Two Model Rules, Supplier Finance Arrangements and Lack of Exchangeability; and
• the next steps in the project.

The Proposed IFRS Taxonomy Update 1/2023 proposes changes to the IFRS Accounting Taxonomy to reflect disclosure requirements arising from:

1. International Tax Reform—Pillar Two Model Rules, which amended IAS 12 Income Taxes;
2. International Tax Reform—Pillar Two Model Rules—Amendments to the IFRS for SMEs Standard, which amended the IFRS for SMEs Accounting Standard;
3. Supplier Finance Arrangements, which amended IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures; and 
4. Lack of Exchangeability, which amended IAS 21 The Effects of Changes in Foreign Exchange Rates.

The IASB was not asked to make any decisions.

Next steps

The IASB will begin the balloting process; it expects to issue the IFRS Taxonomy Update in the first quarter of 2024.

Joint IASB–ISSB meeting

ISSB Consultation on Agenda Priorities (Agenda Paper 2)

The IASB and ISSB (boards) met on 25 January 2024 to discuss feedback on the ISSB’s Request for Information Consultation on Agenda Priorities. Specifically, the boards discussed feedback on a potential project on integration in reporting and feedback on connectivity.

The ISSB’s Request for Information included questions on:

1. the priority of a potential project on integration in reporting relative to the other three proposed sustainability-related projects that could be added to the ISSB’s work plan;
2. whether that project, if considered a priority, should be undertaken as a formal joint project with the IASB or as an ISSB-led project (which could still draw on input from the IASB); and
3. whether that project, if pursued, should build on the concepts from the IASB’s Exposure Draft Management Commentary, the Integrated Reporting Framework and other sources.

The Request for Information did not include a question on connectivity; however, respondents provided feedback on that topic.

The boards were not asked to make any decisions.

Next steps

The IASB will discuss the direction of the Management Commentary project. The ISSB will continue to discuss feedback on the Request for Information and make decisions on the matters raised in it.