The International Accounting Standards Board (IASB) has published its March edition of Update, which summarises its meeting on 21-21 March 2017
The tentative decisions made by the IASB during the meeting are discussed below
Wider Corporate Reporting
The IASB discussed research and options for taking a more active role in the area of wider corporate reporting and tentatively decided to consider playing a more active role as well as undertake further research.
Insurance Contracts
The Board received an oral update on the current progress in the Insurance Contracts project, noting that it plans to publish IFRS 17 Insurance Contracts in the second half of May 2017.
Primary Financial Statements
Concerning earnings before interest and tax (EBIT) the IASB agreed that the staff should continue to explore:
- requiring the presentation of an EBIT subtotal in the statement(s) of financial performance;
- defining EBIT as profit before finance income/expenses and tax; and
- describing finance income/expenses as income/expenses related to the entity’s capital structure.
Concerning the presentation of a management operating performance measure, the IASB agreed that the staff should continue to explore:
- requiring the presentation of such a measure, rather than seeking to define operating profit, in the statement(s) of financial performance;
- allowing items to be excluded from the management operating performance measure as long as the subtotal meets the requirements in existing paragraphs 85, 85A and 85B of IAS 1 Presentation of Financial Statements; and
- requiring additional disclosures to provide transparency around presentation of the management operating performance measure.
Concerning general guidance on classification, aggregation and disaggregation the IASB tentatively decided to develop
- develop principles for aggregation and disaggregation in the financial statements, as well as explore providing more guidance on aggregation characteristics;
- develop definitions of the notions ‘classification’, ‘aggregation’ and ‘disaggregation; and
- develop guidance on the steps involved in applying ‘classification’, ‘aggregation’ and ‘disaggregation’ when preparing financial statements.
Conceptual Framework for Financial Reporting and Rate Regulate Activities
Concerning the requirement in paragraph 11 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to consider the Conceptual Framework when developing accounting policies, the IASB tentatively decided that:
- paragraph 11 of IAS 8 will not apply to accounting policies for regulatory account balances. Instead, entities that develop accounting policies for regulatory account balances by reference to the Framework for the Preparation of the Financial Statements will be required to continue doing so until they apply the future Standard on rate-regulated activities.
- the prohibition from applying the amendment to paragraph 11 of IAS 8 to accounting policies for regulatory account balances will apply both to existing and new accounting policies.
- a regulatory account balance will be defined as the balance of any expense (or income) account that:
- is not recognised as an asset or a liability in accordance with IFRS Standards; and
- is included, or is expected to be included, by the rate regulator as defined in IFRS 14 Regulatory Deferral Accounts in establishing the rate(s) that can be charged to customers.
Financial Instruments with Characteristics of Equity
The IASB confirmed they are satisfied that it has completed all the necessary due process steps on this project and so instructed the staff to begin drafting and balloting the Discussion Paper. The Board also decided that 180 days should be allowed for the Discussion Paper comment period, which it expects to publish towards the end of 2017.
The full copy of IASB Update is available from the IASB’s web site here.