Annual Improvements to IFRS Accounting Standards – Volume 11

Timeline

The IASB published Exposure Draft Annual Improvements to IFRS Accounting Standards – Volume 11 (the ED) in September 2023. Our response to the IASB’s Exposure Draft was submitted on 14 December 2023.

Background

The ED is a collection of eight different proposed amendments to IFRS Accounting Standards:

• IFRS 9 Financial Instrument - Transaction price. The proposed amendment deletes the reference to ‘transaction price’ and revises the wording around it in paragraph 5.1.3; and removes the reference to IFRS 15 in Appendix A.
• IFRS 9 Financial Instrument - Lessee derecognition of lease liabilities. The proposed amendment clarifies a lessee’s accounting for derecognition of a lease liability by adding a cross-reference to paragraph 3.3.3 of IFRS 9 in paragraph 2.1(b)(ii) of IFRS 9.
• IFRS 7 Financial Instruments: Disclosures - Gain or loss on derecognition. The proposed amendment replaces the reference to paragraph 27A of IFRS 7, a paragraph that no longer exists, with a reference to paragraphs 72–73 of IFRS 13; and replaces the phrase ‘inputs that were not based on observable market data’ with ‘unobservable inputs’.
• Implementation Guidance accompanying IFRS 7 Financial Instruments: Disclosures - Disclosure of deferred difference between fair value and transaction price. The proposed amendment to paragraph IG14 of IFRS 7 improves its consistency with paragraph 28 of IFRS 7 which was amended upon the issuance of IFRS 13 Fair Value Measurement but no corresponding amendments were made to paragraph IG14 of IFRS 7.
• Implementation Guidance accompanying IFRS 7 Financial Instruments: Disclosures - Credit risk disclosures. The proposed amendment adds a statement in paragraph IG 1 of IFRS 7 that the implementation guidance accompanying IFRS 7 does not illustrate all the requirements in IFRS 7; and simplifies the wording in paragraph IG20B. This is to resolve potential confusion in paragraph IG20C accompanying IFRS 7 because a statement on the omitted illustrations is only included in paragraph IG20B but not paragraph IG20C.
• IFRS 1 First-time Adoption of International Financial Reporting Standards - Hedge accounting by a first-time adopter. The proposed amendment replaces the word ‘conditions’ with ‘qualifying criteria’ and adds cross-references to paragraph 6.4.1 of IFRS 9 in paragraphs B5–B6 of IFRS 1.  This is to ensure consistency with the wording in IFRS 9.
• IFRS 10 Consolidated Financial Statement - Determination of a ‘de facto’ agent. The proposed amendment clarifies the requirements in paragraph B74 of IFRS 10.
• IAS 7 Statement of Cash Flows - Cost method. The proposed amendment replaces the term ‘cost method’, a term that is no longer defined in IFRS Accounting Standards, with ‘at cost’ in paragraph 37 of IAS 7.

Outreach

Our outreach included discussions with stakeholders and public consultation on our draft comment letter. Thank you to all who participated in this project.

Final Comment Letter

The UKEB’s final comment letter supports the proposals in the ED as they are expected to improve the consistency and understandability of the IFRS Accounting Standards concerned.

The UKEB Final Comment Letter is attached below.