IASB Update March 2018

The International Accounting Standards Board (IASB) has issued its March 2018 edition of Update, which sets out its decisions on matters discussed at its March 2018 meeting

Disclosure Initiative

Regarding discussion paper topics, the IASB the IASB tentatively decided to

• consider the feedback received on the following Discussion Paper topics within the Primary Financial Statements project and not within the Disclosure Initiative—Principles of Disclosure project:
  • roles of the primary financial statements and the notes;
  • presentation of EBIT and EBITDA;
  • presentation of unusual or infrequently occurring items; and
  • fair presentation of performance measures.

• not to pursue the following Discussion Paper topics any further within the Disclosure Initiative—Principles of Disclosure project:
  • guidance on the use of formatting in the financial statements;
  • guidance on the location of accounting policy disclosures; and
  • location of disclosure objectives and requirements in IFRS Standards. 

• not to clarify the use of ‘present’ and ‘disclose’ in IFRS Standards as a separate activity but instead to consider the feedback on the use of these terms when considering how the Board drafts IFRS Standards

Regarding the disclosure problem, the IASB decided to perform a targeted Standards-level review of disclosure requirements. Specifically, the Board tentatively decided to:

• develop guidance to use itself when determining disclosure requirements
• identify one or two IFRS Standards on which to test the guidance;
• prepare an Exposure Draft of amendments to the disclosure requirements of the Standard(s) identified in as a result of testing the guidance on the standards chosen for testing.

Dynamic risk Management

The Board tentatively decided the staff should continue developing the dynamink risk management model based on the following:

• the target profile represents management’s objective for a given asset profile;
• the entity’s risk management strategy should define the target profile considering:
  • the contractual terms of financial liabilities; and
  • the entity’s approach to core deposits where present.
• the notional of the asset profile and the target profile are required to be the same but not the tenors; and
• the time horizon of the target profile is the period of time over which the entity is managing interest rate risk.

Rate-regulated Activities

The Board tentatively decided that the accounting model:

• should apply to defined rate regulation established through a formal regulatory framework that:
  • is binding on both the entity and the regulator; and
  • establishes a basis for setting the rate for specified goods or services that includes a rate-adjustment mechanism.
• require the recognition of regulatory assets or regulatory liabilities if it is more likely than not that they exist; and
• not set thresholds that would prevent recognition of a regulatory asset or regulatory liability for which there is (i) low probability of an inflow or outflow of economic benefits or (ii) high measurement uncertainty.

Improvements to IFRS 8 Operating Segments

Following the Exposure Draft issued in March 2017 the IASB decided that the proposals would not result in sufficient improvements in information to investors to justify the costs that stakeholders would incur if the Board were to amend IFRS 8. Consequently, the Board decided not to amend IFRS 8.

IFRS 13 Post-Implementation Review

Following the post-implementation review (PIR) of IFRS 13 Fair Value measurement the IASB concluded that the standard is working as intended and decided to:

• feed the PIR findings regarding the usefulness of disclosures into the work on Better Communications in Financial Reporting, in particular, the projects on Principles of Disclosure and Primary Financial Statements;
• continue liaising with the valuation profession, monitor new developments in practice and promote knowledge development and sharing; and
• conduct no other follow-up activities.