Following its meeting on 18 January 2017, the International Accounting Standards Board (IASB) has published its January edition of Update, which highlights preliminary decisions made by the Board.
Post Implementation Review of IFRS 13 Fair Value Measurement
The Board discussed a number of papers on the post-implementation review, deciding to focus its scope on:
- the effectiveness of disclosures about fair value measurements;
- the unit of account and fair value measurement of quoted investments;
- the application of judgement in specific areas; and
- the application of the highest and best use when measuring the fair value of non-financial assets.
The Board also decided to undertake various activities in relation to the above scope including to issue a request for information on the above, a review of academic literature, and conduct outreach with additional consultation with investors and preparers.
Symmetric Prepayment Options
The IASB tentatively decided to propose a narrow scope amendment to IFRS 9 so that a financial asset with a symmetric prepayment option would be eligible to measure such an asset at amortised cost, or at fair value through other comprehensive income if:
- the financial asset would otherwise meet the “solely payments of principal and interest” (SPPI) test; and
- on initial recognition, the fair value of the symmetric prepayment option is insignificant.
Accounting Policies and Accounting Estimates
In response to feedback on the wording of an Exposure Draft (ED) proposing amendments to IAS 8 Accounting Policies, Changes in Estimates and Errors, the ED will now define ‘accounting estimates’ rather than ‘a change in accounting estimate’.
Insurance Contracts
There are plans to set up a Transition Resource Group after the new insurance standard has been issued. The mandate objectives of the Group have yet to be decided.
The Conceptual Framework for Financial Reporting
The Board focussed its discussions on the measurement chapter from the May 2015 Exposure Draft tentatively deciding that the revised Conceptual Framework should:
- state that more than one measurement bases might sometimes be selected to provide information about an asset, liability, income or expense; and
- require that both the relevance and faithful representation of information are considered when more than one measurement is selected.
The Board also discussed the other May 2015 Exposure Draft Updating References to the Conceptual Framework. As well as agreeing on a number of changes to references, the IASB tentatively decided to modify the requirement for retrospective application, noting that revised accounting policies would have to be applied retrospectively unless this would involve undue cost or effort.
Copies of IASB Update can be downloaded from the IASB’s website here.