IFRS Latest Developments And Updates – March 2024

Each month, the international Accounting Standards Board (IASB) which is the body saddled with the responsibility of issuing the international Financial Reporting Standards (IFRS) meets to discuss issues concerning the financial Standards.

 

In  this article article we will discuss latest issues on International Financial Reporting Standards (IFRS) particularly with respect to the agenda presented for the March 2024 meeting of IASB as well as the main issues discussed during the meeting.

Agenda For March 2024 Meeting Of IASB

The IASB  held its meeting in London on 18–21 March 2024. There are many topics on the agenda.

Some points taken from the agenda include the following:

1. Work plan update Post-

2. implementation review of IFRS 9 — Impairment Power purchase agreements

3.  Second comprehensive review of the IFRS for SMEs Standard Climate-related and other uncertainties in the financial statements Maintenance and Consistent Application

4. Post-implementation review of IFRS 15 — Revenue from contracts with customers Equity method

5. Management commentary — Project direction Catch-up exposure draft of the ‘Subsidiaries without Public Accountability Standard’ Rate-regulated activities

The full agenda for the meeting can be found in the IASB website.

You can as well go to Deloitte website for more details on the subject.

https://www.iasplus.com/en/news/2024/03/iasb-agenda

Major Issues Discussed And Agreed Upon By IASB During The March 2024 Meeting

From the IASB website, some of the major Issues Discussed and agreed on include the following;

 

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

 

The IASB met on 20 March 2024 to analyse stakeholder feedback on the Request for Information Post-implementation Review of IFRS 15 Revenue from Contracts with Customers. The analysis covered matters raised by stakeholders in relation to:

  • determining a transaction price;
  • determining when to recognise revenue; and
  • applying disclosure requirements.

Determining the transaction price (Agenda Paper 6A)

In response to the feedback, the IASB tentatively decided to take no further action on the matters related to:

  1. variable consideration;
  2. sales-based taxes;
  3. non-cash consideration; and
  4. other aspects of determining the transaction price.

All 14 IASB members agreed with these decisions.

The IASB also discussed matters related to the consideration payable to a customer. The IASB was not asked to make any decisions on these matters.

Determining when to recognise revenue (Agenda Paper 6B)

In response to the feedback, the IASB tentatively decided to take no further action on the matters related to:

  1. the application of the concept of control and the criteria for recognising revenue over time;
  2. the measurement of progress for performance obligations satisfied over time; and
  3. other aspects of determining when to recognise revenue.

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

Disclosure requirements (Agenda Paper 6C)

In response to the feedback, the IASB tentatively decided to take no further action on the matters related to:

  1. respondents’ concerns about the cost–benefit balance of some disclosure requirements;
  2. variation in the quality of disclosed information; and
  3. other aspects of disclosure requirements.

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

 

Next step

 

The IASB will analyse the feedback on other topics identified in the project plan

2. Rate-regulated Activities (Agenda Paper 9)

The IASB met on 21 March 2024 to redeliberate proposed requirements in the Exposure Draft Regulatory Assets and Regulatory Liabilities to be included in the prospective IFRS Accounting Standard on rate-regulated activities (prospective RRA Standard). These requirements relate to discounting estimated future cash flows (Agenda Paper 9A).

 

The IASB also discussed whether to develop reduced disclosure requirements for the prospective RRA Standard that could be included in the prospective IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures (prospective Subsidiaries Standard) (Agenda Paper 9B).

 

3. Discounting estimated future cash flows (Agenda Paper 9A)

Regarding the prospective RRA Standard, the IASB tentatively decided:

 

1. to retain the proposal that an entity be required to discount estimates of future cash flows that arise from a regulatory asset or regulatory liability;

2. to retain the proposal that an entity be required to use the regulatory interest rate for a regulatory asset or regulatory liability as the discount rate for that regulatory asset or regulatory liability;

3. to retain the definition of a regulatory interest rate proposed in the Exposure Draft;

4. to exempt an entity from applying the proposed requirement described in (a) to discount estimates of future cash flows from a regulatory asset or regulatory liability, if the entity expects the period between recognition of that regulatory asset or regulatory liability and its recovery or fulfilment to be 12 months or less;

5. to require an entity that elects to apply the exemption described in (d) to disclose that fact and disclose the carrying amount of regulatory assets and regulatory liabilities at the end of the reporting period to which the entity has applied that exemption;

6. not to exempt an entity from applying the proposed requirement described in (a) to discount estimates of future cash flows from a regulatory asset or regulatory liability for which the regulatory agreement does not specify a time frame for recovery or fulfilment;

7. to retain the proposal that an entity be required to compute a single discount rate when a regulatory agreement specifies, at initial recognition, different regulatory interest rates over the life of a regulatory asset or regulatory liability;

8. not to provide guidance on the computation of the single discount rate described in (g);

9. to exempt an entity that measures regulatory assets or regulatory liabilities described in (g) from applying the proposed requirement described in (a) to discount estimates of future cash flows for the period between recognition and the date from which regulatory interest starts to accrue, if the entity expects that period to be 12 months or less;

10. to require an entity that elects to apply the exemption described in (i) to disclose that fact and disclose the carrying amount of regulatory assets and regulatory liabilities at the end of the reporting period to which the entity has applied that exemption; and

11. to clarify that the proposed requirement described in (g) does not apply to a regulatory asset or regulatory liability that attracts regulatory interest rates that depend on an interest rate benchmark, and not to provide further guidance on measuring such a regulatory asset or regulatory liability.

All 14 IASB members agreed with these decisions.

 

4. Reduced disclosures for rate-regulated entities (Agenda Paper 9B)

The IASB tentatively decided:

 

1. not to develop reduced disclosures for the prospective RRA Standard now; and

2. to include a question seeking stakeholders’ views on the decision not to develop reduced disclosures in the ‘catch-up’ exposure draft the IASB plans to publish after it issues the prospective Subsidiaries Standard.

Ten of 14 IASB members agreed with these decisions.

 

Next step

The IASB will continue to redeliberate the project proposals.

 

 

 

5. Non-hyperinflationary Entity (IAS 21) (Agenda Paper 12)

The IASB met on 19 March 2024 to discuss, in relation to the proposed amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates:

 

the disclosure requirements for subsidiaries without public accountability; and

the due process requirements.

The amendments relate to non-hyperinflationary entities with a presentation currency that is hyperinflationary.

 

For subsidiaries without public accountability (eligible subsidiaries) as defined in the prospective IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures, the IASB tentatively decided to propose that:

 

an eligible subsidiary within the scope of the proposed amendments be required to disclose that its financial statements (or the results and financial position of its foreign operation) and corresponding figures for previous periods have been translated at the closing rate at the date of the most recent statement of financial position; and

an eligible subsidiary whose presentation currency ceases to be hyperinflationary be required to disclose that fact.

an SME to apply the criteria in paragraph 23.78(a), (c) and (d) of the Exposure Draft to determine whether the SME satisfies a promise over time or at a point in time.

All 14 IASB members agreed with these decisions.

 

6. Proposed revised Section 23 Revenue from Contracts with Customers—Additional and alternative simplifications (Agenda Paper 30B)

The IASB tentatively decided to use the term ‘collectability’, instead of ‘customer’s credit risk’, to describe the requirement for an SME to estimate the recoverable amount of assets recognised from the costs incurred to fulfil a contract with a customer.

7. Rate-regulated Activities (Agenda Paper 9)

The IASB met on 21 March 2024 to redeliberate proposed requirements in the Exposure Draft Regulatory Assets and Regulatory Liabilities to be included in the prospective IFRS Accounting Standard on rate-regulated activities (prospective RRA Standard). These requirements relate to discounting estimated future cash flows (Agenda Paper 9A).

 

The IASB also discussed whether to develop reduced disclosure requirements for the prospective RRA Standard that could be included in the prospective IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures (prospective Subsidiaries Standard) (Agenda Paper 9B).

 

8. Discounting estimated future cash flows (Agenda Paper 9A)

Regarding the prospective RRA Standard, the IASB tentatively decided:

 

to retain the proposal that an entity be required to discount estimates of future cash flows that arise from a regulatory asset or regulatory liability;

to retain the proposal that an entity be required to use the regulatory interest rate for a regulatory asset or regulatory liability as the discount rate for that regulatory asset or regulatory liability;

to retain the definition of a regulatory interest rate proposed in the Exposure Draft;

to exempt an entity from applying the proposed requirement described in (a) to discount estimates of future cash flows from a regulatory asset or regulatory liability, if the entity expects the period between recognition of that regulatory asset or regulatory liability and its recovery or fulfilment to be 12 months or less;

to require an entity that elects to apply the exemption described in (d) to disclose that fact and disclose the carrying amount of regulatory assets and regulatory liabilities at the end of the reporting period to which the entity has applied that exemption;

not to exempt an entity from applying the proposed requirement described in (a) to discount estimates of future cash flows from a regulatory asset or regulatory liability for which the regulatory agreement does not specify a time frame for recovery or fulfilment;

to retain the proposal that an entity be required to compute a single discount rate when a regulatory agreement specifies, at initial recognition, different regulatory interest rates over the life of a regulatory asset or regulatory liability;

not to provide guidance on the computation of the single discount rate described in (g);

to exempt an entity that measures regulatory assets or regulatory liabilities described in (g) from applying the proposed requirement described in (a) to discount estimates of future cash flows for the period between recognition and the date from which regulatory interest starts to accrue, if the entity expects that period to be 12 months or less;

to require an entity that elects to apply the exemption described in (i) to disclose that fact and disclose the carrying amount of regulatory assets and regulatory liabilities at the end of the reporting period to which the entity has applied that exemption; and

to clarify that the proposed requirement described in (g) does not apply to a regulatory asset or regulatory liability that attracts regulatory interest rates that depend on an interest rate benchmark, and not to provide further guidance on measuring such a regulatory asset or regulatory liability.

  1. All 14 IASB members agreed with these decisions.

 

9. Reduced disclosures for rate-regulated entities (Agenda Paper 9B)

The IASB tentatively decided:

 

1. not to develop reduced disclosures for the prospective RRA Standard now; and

2. to include a question seeking stakeholders’ views on the decision not to develop reduced disclosures in the ‘catch-up’ exposure draft the IASB plans to publish after it issues the prospective Subsidiaries Standard.

Ten of 14 IASB members agreed with these decisions.

 

Next step

The IASB will continue to redeliberate the project proposals.

 

All 14 IASB members agreed with this decision.

 

10. Other issues raised by respondents to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard (Agenda Paper 30C)

The IASB tentatively decided:

 

2. to finalise paragraph 30.8A in the Exposure Draft, which clarifies the requirements for transactions that include payment or receipt of advance consideration in a foreign currency, and to clarify in this paragraph that:

3. an SME generally recognises a non-monetary asset or non-monetary liability; and

4. an SME that makes multiple payments or receipts in advance is required to determine a date of the transaction for each payment or receipt.

All 14 IASB members agreed with this decision.

to align the requirements for offsetting income tax assets and liabilities in Section 29 Income Tax of the IFRS for SMEs Accounting Standard with those in paragraphs 71 and 74 of IAS 12 Income Taxes.

All 14 IASB members agreed with this decision.

to clarify in paragraph 28.17 of the IFRS for SMEs Accounting Standard that an SME is required to assess the depth of the market for high-quality corporate bonds at a currency level.

All 14 IASB members agreed with this decision.

to clarify the requirement in proposed paragraph 26.14A of the Exposure Draft by explaining that the cumulative amount ultimately recognised for goods or services received as consideration for cash-settled share-based payments equals the amount of cash paid.

All 14 IASB members agreed with this decision.

11. Proposed revised Section 2 Concepts and Pervasive Principles (Agenda Paper 30D)

The IASB tentatively decided to proceed with the proposals in Section 2 of the Exposure Draft and to make changes to these proposals only to improve drafting.

 

All 14 IASB members agreed with this decision.

 

12. Updating the paragraph numbers of the IFRS for SMEs Accounting Standard (Agenda Paper 30E)

The IASB tentatively decided to renumber paragraphs for sections that will be revised and to retain the original paragraph numbers for sections with few amendments.

 

All 14 IASB members agreed with this decision.

 

Next step

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

 

 

All 14 IASB members agreed with these decisions.

 

The IASB tentatively decided to propose that an eligible subsidiary that translates the results and financial position of a foreign operation that has a non-hyperinflationary functional currency into a hyperinflationary presentation currency be required to disclose summarised financial information about the results and financial position of that foreign operation.

 

Thirteen of 14 IASB members agreed with this decision.

 

The IASB set a 120-day comment period for the exposure draft.

 

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 exposure draft.

 

No IASB member indicated an intention to dissent from the proposals in the exposure draft.

Next step

The IASB expects to publish the exposure draft in th

e third quarter of 2024.

For full details of the proceedings of the March 2024 meetings, visit the IASB website

https://www.ifrs.org/news-and-events/updates/iasb/2024/iasb-update-march-2024/

In conclusion, we have just looked at some of issues discussed and decided on by the IASB March meeting. You can visit the IASB website above for more comprehensive Information.

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