Second Comprehensive Review of the IFRS for SMEs Accounting Standard

The IASB met on 22 April 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—Disclosure requirements (Agenda Paper 30A)

The IASB tentatively decided to withdraw its proposal to require an SME to disclose revenue disaggregated into categories, showing separately, as a minimum, revenue arising from:

1. the sale of goods;
2. the rendering of services;
3. royalties;
4. commissions; and
5. any other significant types of revenue from contracts with customers.

Instead, the IASB tentatively decided to include in the proposed revised Section 23 of the IFRS for SMEs Accounting Standard:

1. a requirement that an SME disclose revenue disaggregated into categories that depict its financial performance; and
2. examples of disaggregation categories that might be appropriate for SMEs to use.

All 14 IASB members agreed with these decisions.

The IASB tentatively decided to confirm its proposals to require an SME to disclose:

1. the opening and closing balances of receivables, contract assets and contract liabilities from contracts with customers;
2. revenue recognised in the reporting period that was included in the contract liability balance at the beginning of the period; and
3. the closing balances of assets recognised from the costs incurred to fulfil a contract with a customer, by main category of asset.

All 14 IASB members agreed with these decisions.

The IASB tentatively decided to withdraw its proposals to require an SME:

1. to disclose revenue recognised in the reporting period from promises satisfied or partially satisfied in previous periods;
2. to disclose the amount of amortisation and any impairment losses recognised in the reporting period from assets recognised from the costs incurred to fulfil a contract with a customer; and
3. to provide a quantitative or qualitative explanation of the significance of unsatisfied promises and when they are expected to be satisfied.

Eleven of 14 IASB members agreed with decision (a) and all 14 IASB members agreed with decisions (b)–(c).

The IASB tentatively decided to require an SME:

1. to disclose a description of the nature of the goods or services that the SME has promised to transfer to customers, highlighting any promises to arrange for another party to transfer goods or services to the customer; and
2. to explain the judgements that had a significant effect on the amounts the SME recognised in its financial statements that it made when:
   1. determining the transaction price; and
   2. allocating the transaction price to the promises identified in the contract.

All 14 IASB members agreed with these decisions.

The IASB tentatively decided to amend paragraph 4.11(b) of the Standard to remove the requirement for an SME to subclassify trade and other receivables to show separately receivables arising from accrued income not yet billed.

All 14 IASB members agreed with this decision.

Proposed new Section 12 Fair Value Measurement—Use of plainer language (Agenda Paper 30B)

The IASB tentatively decided:

1. to consider whether plainer language can be used in the new and revised sections of the third edition of the Standard; and
2. to include in the proposed new Section 12 of the Standard the definition of ‘highest and best use’ used in IFRS 13 Fair Value Measurement.  

All 14 IASB members agreed with these decisions.

Intragroup issued financial guarantee contracts (Agenda Paper 30C)

The IASB tentatively decided it would explore measuring intragroup financial guarantee contracts issued for nil consideration by applying Section 21 Provisions and Contingencies.

All 14 IASB members agreed with this decision.