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Electricity Contracts – IASB Issues Guidance for Nature-Dependent Electricity Contracts

Targeted Improvements – IASB Proposes Targeted Improvements to Requirements for Provisions

Climate-Related Disclosures – IASB Proposes Illustrative Examples on Climate-Related and Other Uncertainties in Financial Statements

Hyperinflationary Currencies – IASB Proposes Amendments for Translating Financial Information into Hyperinflationary Currencies

Subsidiary Disclosures – IASB Proposes Amendments to IFRS 19

IASB Issues Annual Improvements to IFRS Accounting Standards

Addendum to the Exposure Draft—Third edition of the IFRS for SMEs Accounting Standard 

Financial Instruments –IASB Proposes Amendments to Accounting for Financial Instruments with Debt and Equity Features

Foreign Currency –IASB Amends IAS 21 for Accounting Requirements for When a Currency is Not Exchangeable

Annual Improvements –IASB Proposes Annual Improvements to IFRSs 

Foreign Exchange – IASB Amends IAS 21 for Accounting Requirements for When a Currency is Not Exchangeable

Request for Information - Post-Implementation Review of IFRS 15 Revenue from Contracts with Customers

Request for Information - Post-Implementation Review of IFRS 9 Financial Instruments Impairment

Climate Matters –IFRS Foundation Publishes Educational Material on Climate Matters and Financial Statements 

Tax Accounting –IASB Amends Tax Accounting Requirements to Help Companies Respond to International Tax Reform

Supplier Finance Arrangements –IASB Adopts New Supplier Finance Disclosure Requirements

Credit Losses –IASB Begins Planned Review of Financial-Crisis-Era Reform to Loan-Loss Accounting

Revenue Recognition –IASB Seeks Input for Review of Accounting Standard on Revenue

Classification and Measurement –IASB Proposes Amendments to IFRS 9 Classification and Measurement Requirements 

International Tax Reform –IASB Proposes Amendments to IAS 12 for International Tax Reform and Pillar Two Model Rules

Financial Instruments –IASB Publishes Post-Implementation Review of Classification and Measurement Requirements for Financial Instruments

Sale and Leaseback Transactions –IASB Issues Narrow-Scope Amendments for Sale and Leaseback Transactions 

IFRS for SMEs – IASB Publishes Draft Third Edition of the IFRS for SMES Accounting Standard

IFRS – IASB Completes Review of IFRS 10, 11 and 12 and Publishes Report

Supplier Finance Agreements –IASB Proposes Enhanced Disclosure Requirements for Supplier Finance Arrangements

Non-Current Liabilities –IASB Proposes Guidance on Non-Current Liabilities with Covenants

Articles

Electricity Contracts – IASB Issues Guidance for Nature-Dependent Electricity Contracts

Summary - The IASB issued targeted amendments to help companies better report the financial effects of nature dependent electricity contracts, which are often structured as power purchase agreements (PPAs).

The IASB indicates that “nature-dependent electricity contracts help companies to secure their electricity supply from sources such as wind and solar power. The amount of electricity generated under these contracts can vary based on uncontrollable factors such as weather conditions. Current accounting requirements may not adequately capture how these contracts affect a company’s performance.”

To allow companies to better reflect these contracts in the financial statements, the IASB has made targeted amendments to IFRS 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures. The amendments:

  • Clarify the application of the ‘own-use’ requirements;
  • Permit hedge accounting if these contracts are used as hedging instruments; and
  • Add new disclosure requirements to enable investors to understand the effect of these contracts on a company’s financial performance and cash flows.

These amendments are required to be applied for annual reporting periods beginning on or after January 1, 2026. Companies can apply the amendments earlier.

For more information, click here.

© 2025 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Targeted Improvements – IASB Proposes Targeted Improvements to Requirements for Provisions

Summary - The IASB published a consultation aimed at improving the requirements for recognizing and measuring provisions on company balance sheets. Provisions are liabilities of uncertain timing or amount.

Investors seek transparent and comparable information about companies’ provisions for assessing future cash flows and financial positions. The IASB’s targeted improvements would help companies apply the requirements more consistently and provide investors with more useful information. The proposed amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets would clarify how companies assess when to record provisions and how to measure them. The amendments would also require companies to provide more information about the measurement. The proposals would most likely be relevant for companies that have large long-term asset decommissioning obligations or are subject to levies and similar government-imposed charges.

The consultation is made up of three parts:

  • Exposure Draft Provisions – Targeted Improvements – Proposed amendments to IAS 37;
  • Exposure Draft Provisions – Targeted Improvements – Proposed amendments to Guidance on Implementing IAS 37; and
  • Exposure Draft Provisions – Targeted Improvements – Basis for Conclusions.

The IASB is inviting feedback on these amendments. The comment period is open until March 12, 2025.

For more information, click here.

© 2025 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Climate-Related Disclosures – IASB Proposes Illustrative Examples on Climate-Related and Other Uncertainties in Financial Statements

Summary - The IASB has published a consultation document, proposing eight examples to illustrate how companies apply IFRS Accounting Standards when reporting the effects of climate-related and other uncertainties in their financial statements.

The eight illustrative examples focus on areas such as materiality judgements, disclosures about assumptions and estimation uncertainties, and disaggregation of information. The principles and requirements illustrated in these examples apply equally to other types of uncertainties beyond climate-related uncertainties.

The illustrative examples do not add to or change the requirements in IFRS Accounting Standards. Instead, they provide guidance on how the requirements in the Standards should be applied to provide investors with better information about climate-related risks and other uncertainties.

The IASB invites all stakeholders to provide feedback on the proposed illustrative examples. The comment period is open until November 28, 2024.

For more information, click here.

© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Hyperinflationary Currencies – IASB Proposes Amendments for Translating Financial Information into Hyperinflationary Currencies

Summary - The IASB published a proposal to address accounting issues that affect companies that translate financial information from a non-hyperinflationary currency to a hyperinflationary currency. The proposal contains narrow-scope amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates, and introduces translation requirements for these companies. The IASB expects the proposed translation requirements to improve information for users of financial statements while being simple and cost-effective for companies to apply.

In a hyperinflationary economy, financial information is useful only if it reflects a measure of current purchasing power of the currency. Applying IAS 21 today does not always result in that outcome and in some cases has led to diversity in accounting practice.

Benefits of the proposed amendments include:

  • More consistent and useful information in financial statements presented in hyperinflationary currencies;
  • Removal of diversity in accounting practices related to translation into a hyperinflationary currency;
  • Improved comparability of financial statements among companies and jurisdictions; and
  • Simpler and low-cost accounting requirements for affected companies.

For more information, click here.

© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Subsidiary Disclosures – IASB Proposes Amendments to IFRS 19

Summary - The IASB published an Exposure Draft proposing amendments to IFRS 19, Subsidiaries without Public Accountability: Disclosures, which was issued in May 2024. The proposals would reduce disclosure requirements from new IFRS Accounting Standards and amendments issued between February 2021 and May 2024.

IFRS 19 simplifies financial reporting for eligible subsidiaries, enabling them to apply IFRS Accounting Standards with reduced disclosure requirements. As IFRS Accounting Standards are developed and amended, IFRS 19 will be amended alongside them—always with a view to reducing disclosure requirements for eligible subsidiaries.

The proposals would reduce or simplify the disclosure requirements related to:

  • Lack of exchangeability (amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates);
  • International tax reform—Pillar Two Model Rules (amendments to IAS 12, Income Taxes);
  • Supplier finance arrangements (amendments to IAS 7, Statement of Cash Flows, and IFRS 7, Financial Instruments: Disclosures);
  • Primary financial statements (IFRS 18, Presentation and Disclosure in Financial Statements); and
  • Non-current liabilities with covenants (amendments to IAS 1, Presentation of Financial Statements).

The Exposure Draft also includes indicative disclosure requirements from the prospective Accounting Standard Regulatory Assets and Regulatory Liabilities and asks for feedback on whether these requirements would be practical for eligible subsidiaries.

The IASB is inviting feedback on these proposals until November 27, 2024.

For more information, click here.

© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

IASB Issues Annual Improvements to IFRS Accounting Standards

Summary - The IASB has issued narrow amendments to IFRS Accounting Standards and accompanying guidance as part of its regular maintenance of the standards. These amendments, published in a single document, Annual Improvements to IFRS Accounting Standards—Volume 11, include clarifications, simplifications, corrections, and changes aimed at improving the consistency of several IFRS Accounting Standards.

The amended standards are:

  • IFRS 1, First-time Adoption of International Financial Reporting Standards;
  • IFRS 7, Financial Instruments: Disclosures and its accompanying Guidance on implementing IFRS 7;
  • IFRS 9, Financial Instruments;
  • IFRS 10, Consolidated Financial Statements; and
  • IAS 7, Statement of Cash Flows.

The amendments are effective for annual periods beginning on or after January 1, 2026, with earlier application permitted.

As set out in the IFRS Foundation Due Process Handbook, annual improvements are limited to changes that either clarify the wording in an IFRS Accounting Standard or correct relatively minor unintended consequences or oversights in the IFRS Accounting Standards. They also correct minor conflicts between the requirements of the IFRS Accounting Standards.

For more information, click here.

© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Addendum to the Exposure Draft—Third edition of the IFRS for SMEs Accounting Standard 

Summary - The IASB has published for public comment the Addendum to the Exposure Draft, Third edition of the IFRS for SMEs Accounting Standard (Addendum), which supplements the exposure draft published in September 2022. The comment deadline is July 31, 2024.

The IASB is supplementing its proposals to respond to feedback from users of SMEs’ financial statements and from the SME Implementation Group. Both groups said the amendments made to full IFRS Accounting Standards relating to lack of exchangeability between two currencies and disclosure requirements for supplier finance arrangements are relevant to SMEs and should be included in the third edition of the Standard.

SMEs are entities that are eligible to apply the IFRS for SMEs Accounting Standard, that is, entities that do not have public accountability and that publish general purpose financial statements for external users. Full IFRS Accounting Standards are developed to meet information needs of investors and other participants in global capital markets.

The proposals in the Exposure Draft would update the IFRS for SMEs Accounting Standard and reflect improvements made to the full IFRS Accounting Standards. The IASB intends the proposals to balance the needs of users of SMEs’ financial statements, while maintaining its commitment to only update the Standard periodically. 

For more information, click here.

© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Financial Instruments –IASB Proposes Amendments to Accounting for Financial Instruments with Debt and Equity Features

Summary - The International Accounting Standards Board (IASB) has issued the Exposure Draft, Financial Instruments with Characteristics of Equity—Proposed amendments to IAS 32, IFRS 7 and IAS 1. The Exposure Draft proposes amendments to address the challenges in companies’ financial reporting on instruments that have both debt and equity features. The comment deadline is March 29, 2024.

International Accounting Standard (IAS) 32, Financial Instruments: Presentation, sets out how a company that issues financial instruments should distinguish debt instruments from equity instruments. The distinction is important because the classification of the instruments affects the depiction of a company’s financial position and performance.

IASB believes that IAS 32 works well for most financial instruments. However, financial instruments have evolved since this IFRS Accounting Standard was initially issued; they are more complex and present new reporting challenges for companies. Companies’ solutions to the reporting challenges differ, resulting in diverse accounting practices that make it difficult for investors to assess and compare companies’ financial position and performance. Investors are calling for better information, particularly about equity instruments.

To address these challenges, the proposals in the Exposure Draft would amend IAS 32; IFRS 7, Financial Instruments: Disclosures; and IAS 1, Presentation of Financial Statements.

The IASB proposes:

  • Clarification of the underlying classification principles of IAS 32 to help companies distinguish between debt and equity;
  • Requirements for companies to disclose information to further explain the complexities of instruments that have both debt and equity features; and
  • New presentation requirements for amounts, including profit and total comprehensive income, attributable to ordinary shareholders separate from the amounts attributable to other holders of equity instruments. 

For more information, click here.

© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Foreign Currency –IASB Amends IAS 21 for Accounting Requirements for When a Currency is Not Exchangeable

Summary - The IASB has issued amendments to International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates, that will require companies to provide more useful information in their financial statements when a currency cannot be exchanged into another currency.

The amendments respond to stakeholder feedback and concerns about diversity in practice in accounting for a lack of exchangeability between currencies. The IASB intends the amendments to help companies and investors by addressing a matter not previously covered in the accounting requirements for the effects of changes in foreign exchange rates.

These amendments will require companies to apply a consistent approach in assessing whether a currency can be exchanged into another currency and, when it cannot, in determining the exchange rate to use and the disclosures to provide.

The amendments will become effective for annual reporting periods beginning on or after January 1, 2025, with early application permitted.

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Annual Improvements –IASB Proposes Annual Improvements to IFRSs 

Summary - The IASB has proposed narrow-scope amendments to IFRS Accounting Standards and accompanying guidance as part of its periodic maintenance of the Accounting Standards.

As explained in the IFRS Foundation’s Due Process Handbook, annual improvements are limited to changes that either clarify the wording in an IFRS Accounting Standard, or correct relatively minor unintended consequences, oversights or conflicts between requirements of the Accounting Standards. The proposed improvements are packaged together in one document.

The proposed amendments in this edition of the annual improvements include clarifications, simplifications, corrections or changes to improve consistency in:

  • IFRS 1, First-time Adoption of International Financial Reporting Standards;
  • IFRS 7, Financial Instruments: Disclosures, and accompanying Guidance on implementing IFRS 7;
  • IFRS 9, Financial Instruments;
  • IFRS 10, Consolidated Financial Statements; and
  • IAS 7, Statement of Cash Flows.

The deadline for comments is December 11, 2023. 

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Foreign Exchange – IASB Amends IAS 21 for Accounting Requirements for When a Currency is Not Exchangeable

Summary - The IASB has issued amendments to International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates, that will require companies to provide more useful information in their financial statements when a currency cannot be exchanged into another currency.

The amendments respond to stakeholder feedback and concerns about diversity in practice in accounting for a lack of exchangeability between currencies. The IASB intends the amendments to help companies and investors by addressing a matter not previously covered in the accounting requirements for the effects of changes in foreign exchange rates.

These amendments will require companies to apply a consistent approach in assessing whether a currency can be exchanged into another currency and, when it cannot, in determining the exchange rate to use and the disclosures to provide.

The amendments will become effective for annual reporting periods beginning on or after January 1, 2025, with early application permitted. 

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Request for Information - Post-Implementation Review of IFRS 15 Revenue from Contracts with Customers

Summary - The IASB has published a Request for Information: Post-Implementation Review of IFRS 15 Revenue from Contracts with Customers. This document seeks input from stakeholders to inform the IASB’s review of the IFRS accounting standard for revenue from contracts with customers, IFRS 15.

The accounting standard was developed jointly with the FASB and came into effect in 2018. It was created to improve the quality and comparability of revenue information provided to investors globally.

IFRS 15 introduced a comprehensive and robust framework for the recognition, measurement and disclosure of revenue that applies to a wide range of transactions and industries. The standard sets out a single coherent approach to recognizing and measuring revenue that provides useful information to investors about the nature, amount, timing and uncertainty of revenue and cash flows arising from a company’s contracts with customers.

Comments are requested by October 27, 2023.

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Request for Information - Post-Implementation Review of IFRS 9 Financial Instruments Impairment

Summary -The IASB launched a call for stakeholders’ feedback on its post-implementation review of the expected credit loss requirements in IFRS 9 Financial Instruments.

IFRS 9 was developed in response to the global financial crisis, following calls from the G20 and other bodies for more timely recognition of loan losses and a forward-looking impairment model.

The ‘expected credit loss’ model in IFRS 9 replaced the previous ‘incurred credit loss’ model, which only allowed credit losses to be recognized when a loss event occurred. Under the incurred credit loss model, the effects of possible future credit loss events were not considered, even when they were expected.

The main objective of the requirements in IFRS 9 is to provide investors with more useful information about a company’s expected credit losses. The Accounting Standard requires a company to recognize and update expected credit losses throughout the life of a financial asset, factoring in the losses it expects based on relevant available information. Consequently, investors receive more timely information about expected credit losses.

Disclosures play an important part in providing investors with the information they need about expected credit losses. As a result, the IASB is also seeking stakeholder feedback on related disclosure requirements in IFRS 7 Financial Instruments: Disclosures in this post-implementation review.

The IASB conducts post-implementation reviews on all major new accounting requirements after companies have applied them for at least two years.

The review of IFRS 9 is being conducted in three parts. The first part, which covered the classification and measurement requirements, concluded in December 2022. The current review is the second part and covers the impairment requirements. The final part, which will cover hedge accounting, will be held at a later stage.

The Request for Information Post-implementation Review of IFRS 9 Financial Instruments―Impairment is open for comments until September 27, 2023.

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Climate Matters –IFRS Foundation Publishes Educational Material on Climate Matters and Financial Statements 

Summary - The IFRS Foundation has published educational material to illustrate how the IFRS for SMEs Accounting Standard requires companies to consider climate-related matters that have a material effect on the financial statements.

The educational material, Effects of climate-related matters on financial statements prepared in accordance with the IFRS for SMEs Accounting Standard, was developed in response to feedback from some members of the SME Implementation Group and respondents to the 2022 Exposure Draft, Third edition of the IFRS for SMEs Accounting Standard. This feedback identifies that interest in the potential effects of climate-related matters on SMEs’ financial statements is growing among users of those statements.

The material provides a non-exhaustive list of examples of when companies may need to consider climate-related matters in their financial statements and is aimed at supporting the consistent application of the IFRS for SMEs Accounting Standard. It neither adds to nor changes the requirements in the IFRS for SMEs Accounting Standard. The material is based on similar educational material published by the IFRS Foundation to support full IFRS Accounting Standards. 

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Tax Accounting –IASB Amends Tax Accounting Requirements to Help Companies Respond to International Tax Reform

Summary - The IASB issued amendments to IAS 12 Income Taxes. The amendments give companies temporary relief from accounting for deferred taxes arising from the Organisation for Economic Co-operation and Development’s (OECD) international tax reform.

The OECD published the Pillar Two model rules in December 2021 to ensure that large multinational companies would be subject to a minimum 15% tax rate. More than 135 countries and jurisdictions representing more than 90% of global GDP have agreed to the Pillar Two model rules.

The IASB has taken urgent action to respond to stakeholders’ concerns about the uncertainty over the accounting for deferred taxes arising from the implementation of the rules.

The amendments will introduce:

A temporary exception to the accounting for deferred taxes arising from jurisdictions implementing the global tax rules. This will help to ensure consistency in the financial statements while easing into the implementation of the rules; and
Targeted disclosure requirements to help investors better understand a company’s exposure to income taxes arising from the reform, particularly before legislation implementing the rules is in effect.

Companies can benefit from the temporary exception immediately but are required to provide the disclosures to investors for annual reporting periods beginning on or after January 1, 2023. 

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Supplier Finance Arrangements –IASB Adopts New Supplier Finance Disclosure Requirements

Summary - The IASB issued disclosure requirements to enhance the transparency of supplier finance arrangements and their effects on a company’s liabilities, cash flows and exposure to liquidity risk. The disclosure requirements are the IASB’s response to investors’ concerns that some companies’ supplier finance arrangements are not sufficiently visible, hindering investors’ analysis.

The amendments supplement requirements already in IFRS Accounting Standards and require a company to disclose:

The terms and conditions;
The amount of the liabilities that are part of the arrangements, breaking out the amounts for which the suppliers have already received payment from the finance providers, and stating where the liabilities sit on the balance sheet;
Ranges of payment due dates; and
Liquidity risk information.

The amendments, which affect IAS 7 Statement of Cash Flows, and IFRS 7 Financial Instruments: Disclosures, will become effective for annual reporting periods beginning on or after January 1, 2024. 

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Credit Losses –IASB Begins Planned Review of Financial-Crisis-Era Reform to Loan-Loss Accounting

Summary - The IASB launched a call for stakeholders’ feedback on its post-implementation review of the expected credit loss requirements in IFRS 9 Financial Instruments.

IFRS 9 was developed in response to the global financial crisis, following calls from the G20 and other bodies for more timely recognition of loan losses and a forward-looking impairment model.

The ‘expected credit loss’ model in IFRS 9 replaced the previous ‘incurred credit loss’ model, which only allowed credit losses to be recognized when a loss event occurred. Under the incurred credit loss model, the effects of possible future credit loss events were not considered, even when they were expected.

The main objective of the requirements in IFRS 9 is to provide investors with more useful information about a company’s expected credit losses. The Accounting Standard requires a company to recognize and update expected credit losses throughout the life of a financial asset, factoring in the losses it expects based on relevant available information. Consequently, investors receive more timely information about expected credit losses.

Disclosures play an important part in providing investors with the information they need about expected credit losses. As a result, the IASB is also seeking stakeholder feedback on related disclosure requirements in IFRS 7 Financial Instruments: Disclosures in this post-implementation review.

The IASB conducts post-implementation reviews on all major new accounting requirements after companies have applied them for at least two years.

The review of IFRS 9 is being conducted in three parts. The first part, which covered the classification and measurement requirements, concluded in December 2022. The current review is the second part and covers the impairment requirements. The final part, which will cover hedge accounting, will be held at a later stage.

The Request for Information Post-implementation Review of IFRS 9 Financial Instruments―Impairment is open for comments until September 27, 2023. 

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Revenue Recognition –IASB Seeks Input for Review of Accounting Standard on Revenue

Summary - The IASB has published a Request for Information: Post-Implementation Review of IFRS 15 Revenue from Contracts with Customers. This document seeks input from stakeholders to inform the IASB’s review of the IFRS accounting standard for revenue from contracts with customers, IFRS 15.

The accounting standard was developed jointly with the FASB and came into effect in 2018. It was created to improve the quality and comparability of revenue information provided to investors globally.

IFRS 15 introduced a comprehensive and robust framework for the recognition, measurement and disclosure of revenue that applies to a wide range of transactions and industries. The standard sets out a single coherent approach to recognizing and measuring revenue that provides useful information to investors about the nature, amount, timing and uncertainty of revenue and cash flows arising from a company’s contracts with customers.

Comments are requested by October 27, 2023.

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Classification and Measurement –IASB Proposes Amendments to IFRS 9 Classification and Measurement Requirements 

Summary - The IASB has released the Exposure Draft, Amendments to the Classification and Measurement of Financial Instruments—Proposed amendments to IFRS 9 and IFRS 7 (Exposure Draft). The comment deadline is July 19, 2023.

The proposed amendments respond to feedback received from a post-implementation review (PIR) of the classification and measurement requirements in IFRS 9, Financial Instruments, which concluded in December 2022. Feedback from that review indicated that most stakeholders believed those requirements achieved their intended purpose, while identifying specific areas for further enhancement or clarification. The Exposure Draft responds to these points.

IFRS 9 specifies how a company should classify and measure financial assets and financial liabilities. It became effective in January 2018, introducing a new credit impairment model in light of the global financial crisis, and combining classification and measurement requirements, impairment and hedge accounting to replace and improve on IAS 39, Financial Instruments: Recognition and Measurement.

In 2021, the IASB began a PIR of IFRS 9, beginning with an assessment of its classification and measurement requirements. In December 2022, the IASB published the Project Report and Feedback Statement IFRS Accounting Standards: IFRS 9 Financial Instruments—Classification and Measurement (PIR Report). The IASB plans reviews of further aspects of IFRS 9.

The proposed amendments include:

  • Clarification of the classification of financial assets with environmental, social and corporate governance (ESG) and similar features; and
  • Settlement of liabilities through electronic payment systems.
  • In coordination with the release of the Exposure Draft, the IASB has published an Exposure Draft Snapshot, Amendments to the Classification and Measurement of Financial Instruments (Snapshot), which provides an overview of the proposals. 

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

International Tax Reform –IASB Proposes Amendments to IAS 12 for International Tax Reform and Pillar Two Model Rules

Summary - The International Accounting Standards Board (IASB) has published the Exposure Draft, International Tax Reform—Pillar Two Model Rules (Exposure Draft). The Exposure Draft includes proposed amendments to International Accounting Standard (IAS) 12, Income Taxes. The IASB issued the proposed amendments to provide temporary relief from accounting for deferred taxes arising from the imminent implementation of the Pillar Two model rules published by the Organisation for Economic Co-operation and Development (OECD). The deadline for comments is March 10, 2023.

At its meeting in November 2022, the IASB tentatively agreed to propose narrow-scope amendments to IAS 12. The decision arose out of the publication by the OECD in December 2021 of its Pillar Two model rules, Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two): Inclusive Framework on BEPS.

The Pillar Two model rules provide a template for the implementation of a minimum corporate tax rate of 15% that large multinational companies would pay on income generated in each jurisdiction in which they operate.

In issuing the proposed amendments, the IASB is responding to stakeholders’ concerns about the potential implications of these rules for the accounting for income tax in financial statements. In particular, stakeholders were concerned about the uncertainty over the accounting for deferred taxes arising from the rules. They said there was an urgent need for clarity in the light of the imminent implementation of these Pillar Two model rules in some jurisdictions.

The proposed amendments would introduce:

  • A temporary exception to the accounting for deferred taxes arising from the implementation of the rules; and
  • Targeted disclosure requirements for affected companies.

More than 135 countries and jurisdictions representing more than 90% of global GDP have agreed to the Pillar Two model rules. These rules:

  • Address the tax challenges arising from the digitalization of the economy; and
  • Provide a template for the implementation of a minimum corporate tax rate of 15% that large multinational companies would pay on income generated in each jurisdiction in which they operate.

Due to the project’s accelerated nature, the IASB plans to finalize any amendments to IAS 12 in the second quarter of 2023, subject to comments on the Exposure Draft. 

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Financial Instruments –IASB Publishes Post-Implementation Review of Classification and Measurement Requirements for Financial Instruments

Summary - The International Accounting Standards Board (IASB) has published its project report and feedback statement concluding the Post-implementation Review (PIR) of the classification and measurement requirements in International Financial Reporting Standard (IFRS) 9, Financial Instruments.

Feedback from stakeholders and research undertaken as part of the PIR show that the requirements set out in IFRS 9 are working as intended and provide useful information to the users of financial statements.

In response to feedback, the IASB also has identified areas for research and standard-setting to further enhance information provided to users of financial statements. The IASB has initiated a standard-setting project focused on a company’s assessment of the contractual cash flow characteristics of financial assets with ESG-linked features and on electronic cash transfers as settlement of a financial asset or liability.

The projects also will include:

  • Clarification of the application of contractual cash flow characteristics assessments to contractually linked instruments; and
  • Improvements to disclosures of fair value changes relating to equity instruments a company has presented in other comprehensive income rather than in profit or loss (OCI presentation election).

The IASB expects to publish an exposure draft setting out proposed amendments from this project in Q1 of 2023.

The IASB also has added a research project to its work plan to explore whether it can clarify requirements for applying the effective interest method to financial instruments measured at amortized cost and requirements for modifications of financial instruments.

The IASB reviews major standards several years after their effective date, to learn whether the standard is working as intended. The PIR sought feedback from companies, investors, auditors, standard-setters, regulators and academics. The IASB received 95 comment letters and attended more than 40 meetings with stakeholders from around the world.

The IASB began the PIR of IFRS 9─Impairment in the second-half of 2022 and expects to publish a request for information in the first-half of 2023. 

For more information, click here.

© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Sale and Leaseback Transactions –IASB Issues Narrow-Scope Amendments for Sale and Leaseback Transactions 

Summary - The IASB has issued amendments to IFRS 16, Leases, which add to the requirements explaining how a company accounts for a sale and leaseback after the date of the transaction. A sale and leaseback is a transaction for which a company sells an asset and leases that same asset back for a period of time from the new owner.

IFRS 16 includes requirements on how to account for a sale and leaseback at the date the transaction takes place. However, IFRS 16 had not specified how to measure the transaction when reporting after that date. The amendments issued add to the sale and leaseback requirements in IFRS 16, thereby supporting the consistent application of the accounting standard.

These amendments will not change the accounting for leases other than those arising in a sale and leaseback transaction.

The amendments are effective for annual reporting periods beginning on or after January 1, 2024. Earlier application is permitted. A seller-lessee applies the amendments retrospectively in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, to sale and leaseback transactions entered into after the date of initial application. 

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

IFRS for SMEs – IASB Publishes Draft Third Edition of the IFRS for SMES Accounting Standard

Summary - The IASB has published for public comment and Exposure Draft, Third Edition of the IFRS for SMES Accounting Standard. This proposal reflects improvements made to full IFRS Accounting Standards, while keeping the standard suitable for small and medium-sized entities. The IASB’s proposals include updating the principles of the standard to align to those of The Conceptual Framework for Financial Reporting issued in 2018 and simplified requirements based on IFRS 13, Fair Value Measurement and IFRS 15, Revenue from Contracts with Customers.

The IASB is also proposing to update the standard for new requirements in IFRS 3, Business Combinations, IFRS 9, Financial Instruments, IFRS 10, Consolidated Financial Statements and IFRS 11, Joint Arrangements. The proposed updates include other improvements made to full IFRS Accounting Standards since the second edition of IFRS for SMEs Accounting Standard was published in 2015.

Comments on the proposal are due March 7, 2023.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

IFRS – IASB Completes Review of IFRS 10, 11 and 12 and Publishes Report

Summary - The IASB has published a Project Report and Feedback Statement concluding its Post-implementation Review (PIR) of the following accounting standards:

  • IFRS 10, Consolidated Financial Statements;
  • IFRS 11, Joint Arrangements; and
  • IFRS 12, Disclosure of Interests in Other Entities.

Based on feedback from stakeholders and research undertaken as part of the PIR, the IASB concluded that the requirements set out in these IFRSs are working as intended and that application of the requirements did not give rise to unexpected costs. Further, based on the evidence gathered, the IASB assessed that none of the matters arising from the PIR were of high or medium priority.

The PIR report identifies five topics as low priority that could be explored if they are judged to be of high priority in the next agenda consultation. The five topics are:

  • Subsidiaries that are investment entities;
  • Transactions that change the relationship between an investor and an investee;
  • Transactions that involve “corporate wrappers”;
  • Collaborative arrangements outside the scope of IFRS 11; and
  • Additional disclosures about interests in other entities.

Stakeholders requiring further guidance are encouraged to submit questions to the IFRS Interpretations Committee, provided that these questions meet the submission criteria. 

The IASB conducted this PIR process from 2019 to 2022. It sought feedback from companies, investors, auditors, standard-setters, regulators and academics. More than 35 meetings were held to consult with stakeholders and other consultative bodies in the second phase of the PIR. 

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© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Supplier Finance Agreements –IASB Proposes Enhanced Disclosure Requirements for Supplier Finance Arrangements

Summary - The IASB has published the Exposure Draft, Supplier Finance Arrangements - Proposed Amendments to IAS 7 and IFRS 7. The comment deadline is March 28, 2022.

The IASB intends these revisions to the supplier finance disclosure requirements, if adopted as proposed, to enhance the transparency of supplier finance arrangements and their effects on a company’s liabilities and cash flows.

Supplier finance arrangements are often referred to as supply chain finance, payables finance, or reverse factoring arrangements. The IASB believes these proposals would meet investors’ demands for more detailed information to help them analyze and understand the effects of such arrangements.

Under the proposals, a company would be required to disclose information that enables investors to assess the effects of the company’s supplier finance arrangements on its liabilities and cash flows. These proposals would amend IAS 7, Statement of Cash Flows, and IFRS 7, Financial Instruments: Disclosures. The proposals complement an agenda decision published by the IFRS Interpretations Committee in 2020.

The proposed amendments would affect a company that, as a buyer, enters into one or more supplier finance arrangements, under which the company, or its suppliers, can access financing for amounts the company owes its suppliers. 

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© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Non-Current Liabilities –IASB Proposes Guidance on Non-Current Liabilities with Covenants

Summary - The IASB has published the Exposure Draft, Non-current Liabilities with Covenants. The comment deadline is March 21, 2022. The Exposure Draft includes proposed amendments to International Accounting Standard (IAS) 1, Presentation of Financial Statements. The IASB believes these proposals, if adopted as amendments, will improve the information companies provide about long-term debt with covenants. IAS 1 requires a company to classify a liability as non-current only if the company has a right to defer settlement of the liability for at least 12 months after the reporting date. However, such a right is often subject to the company complying with covenants after the reporting date. For example, a company might have long-term debt that could become repayable within 12 months if the company fails to comply with covenants after the reporting date.

The proposed amendments announced today would specify that, in such a situation, covenants would not affect the classification of a liability as current or non-current at the reporting date. Instead, a company would:

  • Present non-current liabilities that are subject to covenants on the statement of financial position separately from other non-current liabilities; and
  • Disclose information about the covenants in the notes to its financial statements, including their nature and whether the company would have complied with them based on its circumstances at the reporting date.

The IASB expects that these proposals will improve the information a company provides about non-current liabilities with covenants by enabling investors to assess whether such liabilities could become repayable within 12 months. The proposals also address feedback from stakeholders about the classification of debt as current or non-current when applying requirements introduced in 2020 that are not yet in effect. Consequently, the IASB is also proposing to defer the effective date of those requirements to align with the proposed amendment. In addition to the Exposure Draft, the IASB has also released a Snapshot document that provides an overview of the proposal. 

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.