This IASB Update highlights preliminary decisions of the International Accounting Standards Board (Board). Projects affected by these decisions can be found on the work plan. The Board's final decisions on IFRS® Standards, Amendments and IFRIC® Interpretations are formally balloted as set out in the IFRS Foundation's Due Process Handbook

The Board met on 20–24 September 2021, with some members joining remotely.    

Work plan overview

Board work plan update (Agenda Paper 8)

The Board met on 20 September 2021 to receive an update on its work plan. The Board was not asked to make any decisions.

Next step

The Board expects to receive the next update on its work plan by January 2022.

Research and standard-setting

Post-implementation Review of IFRS 9—Classification and Measurement (Agenda Paper 3)

The Board met on 20 September 2021 to discuss the forthcoming request for information.

The Board approved the publication of the request for information and set a 120-day comment period.

All 12 Board members agreed with these decisions. 

Next step

The Board expects that the request for information will be published in the final week of September 2021.

Dynamic Risk Management (Agenda Paper 4)

The Board met on 21 September 2021 to discuss potential refinements to the Dynamic Risk Management model (DRM model). The potential refinements address one of the challenges identified during meetings with preparers—incorporating risk limits in the DRM model.

The Board was not asked to make any decisions.

Next step

At its future meetings, the Board will continue to discuss potential refinements to address the key challenges identified during meetings with preparers.

Financial Instruments with Characteristics of Equity (Agenda Paper 5)

The Board met on 24 September 2021 to discuss the classification of financial instruments as financial liabilities or equity instruments. It discussed:

  • financial instruments with contingent settlement provisions; and
  • the effects of laws on the contractual terms of financial instruments.

Financial instruments with contingent settlement provisions (Agenda Papers 5A–5D)

The Board discussed problems that arise in practice in classifying:

  1. financial instruments with contingent settlement provisions (as described in paragraph 25 of IAS 32 Financial Instruments: Presentation); and
  2. other financial instruments with features affected by contingent events.

The Board then discussed potential clarifications to IAS 32 that could resolve such practice problems.

The Board was not asked to make any decisions but expressed its intention to develop the potential clarifications further.

The effects of laws on the contractual terms of financial instruments (Agenda Papers 5E–5F)

The Board discussed the problems that arise in practice when an issuer of a financial instrument determines whether terms that are required by law to be incorporated into the contract (or, indeed, other requirements imposed by law that are not incorporated into the contract) need to be considered in classifying the financial instrument.

The Board then discussed potential clarifications that it could develop to address such practice problems.

The Board was not asked to make any decisions but expressed its intention to develop the potential clarifications further.

Next step

The Board will continue to discuss these topics at a future meeting.

Goodwill and Impairment (Agenda Paper 18)

The Board met on 20 September 2021 to consider its plan to redeliberate the preliminary views it expressed in the Discussion Paper Business Combinations—Disclosures, Goodwill and Impairment.

The Board decided to prioritise performing further work:

  1. to make tentative decisions on the package of disclosure requirements about business combinations described in the Discussion Paper; and
  2. to analyse specific aspects of the feedback on the subsequent accounting for goodwill including:
  1. whether it is feasible to make a reliable estimate of the useful life of goodwill and the pattern in which it diminishes; and
  2. the potential effects of derecognising significant amounts of goodwill on transition to an amortisation-based model were the Board to decide to reintroduce amortisation.

The Board will then redeliberate its preliminary view that it should retain the impairment-only model to account for goodwill.

All 12 Board members agreed with this decision.

Next step

The Board will follow its project plan in future meetings.

Extractive Activities (Agenda Paper 19)

The Board met on 23 September 2021 to discuss the scope and objectives of its Extractive Activities research project.

Project scope and objectives (Agenda Paper 19A)

The Board tentatively decided that the project’s scope and objectives should be to explore two aspects of IFRS 6 Exploration for and Evaluation of Mineral Resources:

  1. developing requirements or guidance to improve the disclosure objectives and requirements about an entity’s exploration and evaluation (E&E) expenditure and activities to provide more useful information to primary users of financial statements.
    All 12 Board members agreed with this decision.
  2. removing the temporary status of IFRS 6.
    Eight of 12 Board members agreed with this decision.

In reaching these decisions, the Board made a series of more detailed tentative decisions.

Matters in the scope of IFRS 6 (Agenda Paper 19C)

The Board tentatively decided to explore developing requirements or guidance to improve disclosures about E&E expenditure and activities.

The Board tentatively decided not to develop requirements or guidance about the unit of account to apply to E&E expenditure or about which E&E expenditures to capitalise and when to start and stop capitalisation.

The Board also tentatively decided not to develop requirements for standardising the accounting for intangible E&E expenditure and research and development expenditure. The Board also tentatively decided not to develop additional requirements or guidance for the impairment of E&E assets.

All 12 Board members agreed with these decisions.

Matters outside the scope of IFRS 6 (Agenda Paper 19D)

In relation to matters outside the scope of IFRS 6, the Board tentatively decided not to develop requirements or guidance for the application of other IFRS Standards as part of its Extractive Activities research project. The Board also tentatively decided not to consider further the accounting for collaborative arrangements or disclosures that are not specifically required by IFRS Standards as part of the project.

All 12 Board members agreed with these decisions.

Reserve and resource information (Agenda Paper 19E)

The Board tentatively decided not to explore developing requirements or guidance for reserve and resource information in financial statements.

All 12 Board members agreed with this decision.

Next step

The Board will consider what research to do for this project.

Primary Financial Statements (Agenda Paper 21)

The Board met on 21 September 2021 to redeliberate some of the proposals in the Exposure Draft General Presentation and Disclosures relating to:

  • management performance measures—Agenda Papers 21A and 21B; and
  • principles of aggregation and disaggregation and their application in the primary financial statements and the notes—Agenda Paper 21D.

Management performance measures and the scope of public communications (Agenda Paper 21A)

The Board discussed the scope of public communications in the definition of management performance measures but did not reach any conclusions. The Board expressed its intention to explore further how to clarify the scope of public communications, considering the objective of proposals for management performance measures and the extent to which detailed guidance is needed to meet that objective.

The Board also considered other aspects of the definition of management performance measures and expressed its intention to discuss how to clarify that an entity is not required:

  1. to repeat disclosures provided in the interim financial statements in the annual financial statements; or
  2. to review historical communications related to previous financial statements to identify management performance measures.

The Board discussed the timing of public communications and how requirements for management performance measures would apply to private entities.

The Board was not asked to make any decisions.

Management performance measures—other aspects of definition (Agenda Paper 21B)

The Board tentatively decided to amend the definition of management performance measures:

  1. to remove the reference to complementing totals or subtotals specified by IFRS Standards; and
  2. to state that totals and subtotals specified by IFRS Standards are not management performance measures.

All 12 Board members agreed with this decision.

The Board discussed the proposed requirement for a management performance measure to communicate management’s view of an aspect of performance but did not reach any conclusions. The Board expressed its intention to analyse that proposal further, considering the objective of the proposals for management performance measures and the extent to which detailed guidance is needed to meet that objective.

Principles of aggregation and disaggregation and their application in the primary financial statements and the notes (Agenda Paper 21D)

The Board tentatively decided to set out the relationship between the general presentation and disclosure requirements and the principles of aggregation and disaggregation by:

  1. separating the general requirement to provide information about classes of assets, liabilities, equity, income, expenses and cash flows from the general requirements on presentation in the primary financial statements.
  2. linking the general requirement to provide information about classes with the objective of financial statements.
  3. removing the reference to ‘material’ in the requirement.
  4. defining a class of assets, liabilities, income, expenses, items of equity or cash flows as ‘an aggregation of items (such as assets) based on shared characteristics’.
  5. explaining that:
  1. the purpose of aggregation into such classes is to make information understandable.
  2. the requirement to disclose such classes applies to all material classes. Hence any class of aggregated items should be disaggregated if the resulting disaggregated classes provide material information. Material classes might arise because items have a single dissimilar characteristic.

All 12 Board members agreed with these decisions, subject to considering whether ‘class’ is the best term to use in all situations. This caveat applies to all the Board’s decisions on Agenda Paper 21D.

The Board tentatively decided to require an entity to explain how a disclosed class of items is included in line items in the primary financial statements. Nine of 12 Board members agreed with this decision.

The Board tentatively decided to include application guidance summarising characteristics that:

  1. if shared, might form the basis for aggregating items that comprise a class that enhances the understandability of information provided in the financial statements.
  2. if not shared, might form the basis for disaggregating a single class of items into separate classes that provide material information.

All 12 Board members agreed with this decision.

Aggregation and disaggregation in the notes

The Board tentatively decided to provide application guidance that states that, in general, the more diverse the items in a class (that is, the more dissimilar characteristics the items have in addition to the shared characteristics that form the basis for the class) the more likely it would be that disaggregation based on some of those dissimilar characteristics would result in material information. Seven of 12 Board members agreed with this decision.

The Board also discussed whether to provide cost relief for the general requirement to provide information about classes. The Board decided to continue that discussion after it has considered cost relief for specific disclosure requirements at a future Board meeting.

All 12 Board members agreed with this decision.

Aggregation and disaggregation in the primary financial statements

The Board tentatively decided to provide application guidance that states that, in general, the more diverse the items in a class (that is, the more dissimilar characteristics the items have in addition to the shared characteristics that form the basis for the class) the more likely it would be that disaggregation based on some of those dissimilar characteristics would result in a more understandable overview.

Seven of 12 Board members agreed with this decision.

Next step

The Board will discuss Agenda Papers 21C, 21E and 21F and continue to redeliberate the project proposals at future meetings.

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