7 IASB General Update

Project Type	Monitoring
Project Scope	Various
Purpose of the paper	This paper provides the Board with an update on projects the Secretariat is currently monitoring, including the work of the IFRS Interpretations Committee. As agreed with the Board, the Secretariat monitors projects being undertaken by the IASB and IFRS Interpretations Committee. This is undertaken to inform the Board about the progress and decisions being made by the IASB on active projects. Discussion by the Board may also help inform interactions with international standard setter meetings, including the IASB's Accounting Standards Advisory Forum (ASAF).

UKEB Project Status: Monitoring	IASB project page
IASB Next Milestone: Decide Project Direction (Q1 2024)

Question for the Board
1. Do Board members have any questions or comments on the Climate-related and Other Uncertainties in the Financial Statements' update?

| UKEB Project Status: Active Monitoring | UKEB project page ## Business Climate-related and other uncertainties in the financial statements**

IASB Rationale:

• Academic evidence and feedback suggest that the information is useful and many entities are already providing the information.
• Concerns from preparers about commercial sensitivity are dealt with by proposing an exemption in specific circumstances.
• Feedback from stakeholders suggests it might be difficult for an entity to follow up on the achievement of synergies.
• Review of information suggests there is a common understanding of 'synergies'.
• Entities often do not calculate the precise amount of expected synergies.

Disclosure requirements for specific types of entities

B25. In July 2023, the IASB tentatively decided to propose the prospective IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures be amended after its issue to require an eligible subsidiary to disclose quantitative information about expected synergies, subject to the same exemption proposed for an entity applying IFRS 3 (see paragraph D17).

B26. The IASB also tentatively decided that unlisted entities applying full IFRS Accounting Standards have no exemptions from disclosing information about the subsequent performance of business combinations.

Summary of key disclosure requirements

B27. The following table[^24] summarises the tentative key disclosure requirements, clarifying the difference between those disclosures required for all material business combinations and those disclosures only required for strategically important business combinations:

Impairment test in IAS 36 Impairment of Assets

B28. The proposed changes to the impairment test will affect any entity that has cash-generating units (CGUs) containing goodwill. Also, the proposed amendments to how 'value in use'[^27] is calculated will affect the impairment test of all assets to which IAS 36 applies.

Amortisation

B29. In November 2022[^28] the IASB tentatively decided not to explore amortisation of goodwill further and retain the impairment-only approach for the subsequent accounting for goodwill, using the annual quantitative impairment test. The IASB concluded that extensive evidence collected, including the UKEB research report Subsequent Measurement of Goodwill: A Hybrid Model[^29], did not demonstrate a compelling case for change.

Reducing cost and complexity of the impairment test of CGUs containing goodwill

Retain requirement for annual impairment test

B30. In May 2023[^30] the IASB tentatively decided to retain the requirement to perform the quantitative impairment test annually in IAS 36.

Simplify calculation of 'Value in use'

B31. In March 2023[^31] the IASB tentatively decided to:

1. remove from IAS 36 the requirement to use pre-tax cash flows (IAS 36.51) and pre-tax discount rates[^32] (IAS 36.55 and IAS 36.A20) in calculating 'value in use' when performing an impairment test;
2. require an entity to disclose whether a pre-tax or a post-tax discount rate was used in calculating value in use, adding to the requirements in IAS 36.130(g) and IAS 36.134(d)(v) to disclose the discount rate(s) applied to cash flow projections, but removing the requirement that the discount rate disclosed be a pre-tax rate; and
3. require an entity to use internally consistent assumptions for cash flows and discount rates regardless of whether value in use is estimated on a pre-tax or post-tax basis.

B32. The IASB discussed several safeguards in IAS 36 that help in auditing. The IASB tentatively decided to:

1. remove a constraint on cash flows used to estimate value in use (IAS 36.33(a) and IAS 36.44). An entity would no longer be prohibited from including cash flows:
   1. arising from future restructuring to which the entity is not yet committed; or
   2. from improving or enhancing an asset's performance;
2. retain the requirement to assess assets or cash-generating units in their current condition; and
3. add no additional constraints on the inclusion of those cash flows beyond those already in IAS 36.

Effectiveness of the impairment test of CGUs containing goodwill at recognising impairment losses on goodwill on a timelier basis, at a reasonable cost

Feasibility of designing a different impairment test

B33. In May 2023[^33] the IASB tentatively decided that it is not feasible to design a different impairment test that would, at a reasonable cost, be significantly more effective than the impairment test currently required by IAS 36.

Reduce shielding

B34. In July 2023[^34] the IASB tentatively decided to clarify the requirements on how an entity allocates goodwill to cash-generating units in IAS 36.80[^35]. For example, by

1. replacing the wording in IAS 36.80(a) 'goodwill is monitored for internal management purposes' with 'business associated with the goodwill is monitored for internal management purposes';
2. clarifying the meaning of the proposed new wording for IAS 36.80(a) by providing limited clarifications of what is meant by 'monitoring' a business associated with goodwill;
3. clarifying that 'operating segment' in IAS 36.80(b) is intended to show the highest level that can be used by an entity in the impairment test when applying IAS 36.80(a), not a default; and
4. clarifying why IAS 36 requires an entity to allocate goodwill to a cash-generating unit or a group of cash-generating units.

Reduce management over-optimism

B35. In July 2023[^36] the IASB tentatively decided to add to IAS 36.80:

1. a requirement for an entity applying IFRS 8 Operating Segments to disclose[^37] the reportable segments in which cash-generating units containing goodwill are included. This will give users of financial statements more visibility of what cash-generating units are, which will help them better assess the assumptions disclosed; and
2. an explanation of the difference between management monitoring 'strategically important' business combinations for the purpose of subsequent performance disclosure, and management monitoring a business associated with the goodwill for the purpose of impairment testing.

Next steps

B36. The IASB is expected to issue an exposure draft (ED) setting out its proposals in H1 2024, with a four-month comment period. It will be important to identify any major concerns with the proposals summarised in this paper in case they need to be brought to the attention of the IASB ahead of the issue of the ED.

B37. The UKEB Secretariat will continue to monitor the IASB project and a Project Initiation Plan will be brought to the board closer to the publication of the ED.

Appendix C: Rate-regulated Activities

Matters discussed at the September 2023 IASB meeting

C1. The IASB met on 20 September 2023:

1. To redeliberate the proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities (ED) relating to credit and other risks affecting the estimates of future cash flows arising from a regulatory asset or a regulatory liability.
2. To discuss how to use the responses to a survey on the direct (no direct) relationship concept to develop guidance in the prospective Accounting Standard.
3. The IASB staff also provided a paper which included the survey and the background information accompanying the survey on which the IASB was not asked to make any decisions.

Measurement—Credit and other risks

IASB tentative decisions

C2. The IASB tentatively decided that the proposed Standard would:

1. retain the requirement proposed in the ED that an entity estimating future cash flows arising from a regulatory asset or a regulatory liability:
   1. reflects in the estimates the uncertainty about the amount or timing of future cash flows; and
   2. assesses whether the entity or its customers bear this uncertainty in future cash flows;
2. specify that if an entity bears credit risk, the entity:
   1. estimates uncollectible amounts considering the net cash flows that will arise from the recovery of regulatory assets and the fulfilment of regulatory liabilities; and
   2. allocates the estimates of uncollectible amounts to regulatory assets only;
   3. provide no additional guidance on how an entity accounts for: - credit risk if the entity is compensated for this risk; and - demand risk; and
   4. retain the requirement proposed in the Exposure Draft that an entity's estimates of future cash flows arising from a regulatory liability do not reflect the entity's own non-performance risk.

UKEB Secretariat response

C3. It its final comment letter, the UKEB did not comment on demand risk or credit risk with respect to measurement. However, the letter highlighted the interaction between the price control period and the licence period. The UKEB was of the view that it is unclear how to apply the proposed requirements relating to the boundary of the regulatory agreement with respect to the measurement requirements. For example, it is not clear how to deal with the very practical issue that approvals from a regulator may be given well after the end of the reporting period, e.g. more than one year after the end of the regulatory period. It may well be that entities could recognise a regulatory asset or liability based on previous interactions with the regulator, but this needs to be included in the guidance.

C4. At its June 2023 meeting, the IASB staff stated that they will analyse feedback received on the boundary of a regulatory agreement and will provide corresponding recommendations for the IASB at a future meeting.

The direct (no direct) relationship concept—Report on findings from the survey

IASB tentative decisions and report on feedback from the survey

C5. The IASB staff reported on the findings from the survey[^38] on the direct (no direct) relationship concept.

C6. The IASB received 48 completed surveys from 39 respondents[^39] in 16 jurisdictions. Most respondents reported that they were able to conclude whether their regulatory capital base (RCB) had a direct (no direct) relationship with their property, plant and equipment (PPE). There was an almost equal split between those concluding there was a direct relationship (21 respondents) and those concluding there was no direct relationship (20 respondents, three of which were from the UK). There were five respondents that were unable to conclude whether there was a direct (no direct) relationship and the IASB followed up with these respondents to discuss their challenges. Two respondents were found not to be within the scope of the ED.

C7. The IASB tentatively decided that the prospective Accounting Standard would:

1. include the direct (no direct) relationship concept to help an entity identify differences in timing arising from the regulatory compensation the entity receives on its regulatory capital base (RCB);
2. specify that an entity's ability to trace differences between the regulatory capital base and the property, plant and equipment (PPE) at an asset level is a strong indicator that they have a direct relationship;
3. specify that, in the case of service concession arrangements, an entity determines whether the regulatory capital base has a direct (no direct) relationship with the intangible asset that arises from the service concession arrangement; and
4. include examples to illustrate how an entity determines the direct (no direct) relationship using specific fact patterns.

UKEB Secretariat response

C8. The UKEB Secretariat and a UKEB board member have met with an IASB member and IASB staff to discuss the UKEB's concerns that the IASB's survey on the direct/no direct relationship focussed on whether the concept was clear and did not go further to explore the potential impact of the tentative decisions made based on this concept on entities with no direct relationship between its PPE and RCB. The UKEB Secretariat has agreed that it will develop a model to illustrate how the adjustments to the RCB could be accounted for by entities with no direct relationship.

IASB Next steps

C9. The IASB will continue to redeliberate the project proposals.

C10. The IASB's Consultative Group on Rate-regulation is scheduled to meet on 13 October 2023 with discount rates the topic to be discussed.

Feedback from RRA TAG meeting held on 22 September 2023

C11. The RRA TAG held its third meeting on 22 September 2023.

C12. The topics presented by the UKEB Secretariat and discussed by the Group included:

1. An overview of the IASB's tentative decisions in June 2023.
2. Specific regulatory adjustments analysed against the definitions in the ED and the IASB's tentative decisions. The appendices to the paper addressed the Total Expenditure (Totex) adjustment mechanism, Performance Incentives – Sewer Collapses and the Traffic Risk Sharing (TRS) mechanism.
3. An overview of feedback from the interviews conducted for the economic effects study, specifically on the direct (no direct) relationship concept.

C13. The members were generally satisfied with how the papers reflected the regulatory adjustments. Discussions of the adjustments highlighted the need to expand the Totex example and to explore the unit of account and inflation in more detail.

C14. The UKEB Secretariat has proposed a meeting with the IASB staff, tentatively scheduled for 18 October 2023, to discuss this example and our understanding of the IASB's model.

C15. At the request of the UKEB Technical Director during discussions with IASB Board members at ASAF, the IASB is involving the UKEB in meetings with certain regulated entities taking place during October 2023.

UKEB next steps

C16. The RRA TAG agreed that the Totex example would be revised to demonstrate multi-year transactions and also include adjustments relating to capital expenditure (capex) and operating expenditure (opex) in an effort to test whether everyone had a clear understanding of the proposed requirements. This example will be developed for discussion at the 13 December 2023 RRA TAG meeting.

C17. The RRA TAG also agreed that, in addition to the expanded example on Totex, the following topics should be discussed at the same meeting:

1. Unit of account.
2. Inflation.

Appendix D: Equity Method[^40]

D1. At its September 2023 meeting, the IASB discussed:

1. the implications of applying its tentative decisions (for investments in associates) to investments in:
   1. subsidiaries in separate financial statements; and
   2. joint ventures;
2. whether to propose amendments to improve the disclosure requirements for investments in associates; and
3. whether to expand the project's scope.

Implications of applying its tentative decisions to investments other than those in associates accounted for using the equity method

D2. At the September 2023 meeting the Secretariat provided the Board an update on this topic in preparation for the September 2023 ASAF meeting[^41]. The IASB's tentative decision to recognise the full gain or loss on all transactions with equity-accounted investments would change current practice for entities that either (i) applied the requirement in paragraph 28 of IAS 28 Investments in Associates and Joint Ventures, thereby partially restricting any gain or loss; or (ii) applied the requirement in paragraph B86(c) of IFRS 10, thereby fully restricting any gain or loss.

D3. The IASB staff identified the following two possible alternatives for investments other than those in associates:

1. Alternative 1—Equity method as applicable in IAS 28.
2. Alternative 2—Equity method as applicable in IAS 28, with a requirement to restrict gains or losses from transactions between the parent and its subsidiaries.

In both alternatives, 'equity method as applicable in IAS 28' refers to the equity method as it would be amended by the IASB's tentative decisions.

D4. Most IASB members who provided their views on the alternatives preferred Alternative 1, consistent with the UKEB position at the September 2023 ASAF meeting.

D5. The IASB was not asked to make any decisions at its September meeting. The IASB staff plan to bring a decision-making paper to a future meeting.

Possible improvements to disclosure requirements for investments in associates

D6. The IASB also discussed whether to propose amendments to improve the disclosure requirements for investments in associates arising from its tentative decisions on the Equity Method project to date and tentatively decided to propose the following amendments to IFRS 12 Disclosure of Interests in Other Entities:

1. To require that an investor disclose the gain or loss from recognising its share of other changes in its associate's net assets that change its ownership interest, while it retains significant influence.
2. To require that an investor that has entered into a contingent consideration arrangement disclose:
   1. on obtaining significant influence in an associate: - the amount recognised as part of the cost of the investment; - a description of the arrangement and the basis for determining the amount of the payment; and - an estimate of the range of outcomes (undiscounted) or, if a range cannot be estimated, that fact and the reasons why a range cannot be estimated. If the maximum amount of the payment is unlimited, the investor shall disclose that fact.
   2. for each subsequent reporting period until the investor collects or settles the contingent consideration or it is cancelled or expires: - any changes in the recognised amounts, including any differences arising upon settlement; - any changes in the range of outcomes (undiscounted) and the reasons for those changes; and - the valuation techniques and key model inputs used to measure the contingent consideration.

Transactions with associates:

1. 1. To require that an investor disclose its gains or losses on transactions to its associates ('downstream' transactions e.g. a sale of assets from the investor to its associates).
   2. Not to require an investor to disclose the gains or losses on transactions from its associates ('upstream' transactions e.g. a sale of assets from an associate to the investor).
2. To require a disclosure objective requiring an investor to disclose information that enables users of its financial statements to evaluate the changes in the amounts in the financial statements arising from investments in associates.
3. To require that an investor disclose a reconciliation between the opening and closing carrying amount of its investments in associates, to meet the new disclosure objective.

Project scope

D7. The IASB staff paper includes the staff analysis on whether to expand the project's scope for the following three application questions that have recurrent themes:

1. Applying paragraph 13 of IAS 28—in substance ownership that currently gives access to returns associated with an ownership interest.
2. Reciprocal interests, also known as crossholdings.
3. Non-coterminous reporting dates and dissimilar accounting policies.

D8. The IASB decided to retain the project's scope.

D9. The IASB also decided not to ask in the invitation to comment whether the IASB should seek views in its next agenda consultation on adding to its work plan a project on assessing the rights that currently give an investor access to returns when applying IAS 28.

Next steps

D10. At a future IASB meeting, the staff will ask the IASB to:

1. continue discussion of the implications of applying its tentative decisions to investments, other than those in associates, accounted for using the equity method;
2. discuss possible improvements to disclosure requirements for investments, other than those in associates, accounted for using the equity method;
3. decide whether to publish an exposure draft of amendments to IAS 28 or an exposure draft of IAS 28 revised; and
4. discuss transition requirements for the proposals to revise IAS 28.

D11. The IASB work plan, at the time of writing, indicates that the Exposure Draft is expected in H2 2024.

D12. The UKEB Secretariat will continue to monitor the IASB discussions.

Appendix E: IASB General Update – Amendments to the Classification and Measurement of Financial Instruments

E1. At its September meeting, the IASB discussed[^42] the responses it had received from the public consultation on the Exposure Draft (ED) Amendments to the Classification and Measurement of Financial Instruments. It did not take any decisions.

E2. Overall, respondents welcomed the IASB's proposals while also providing some recommendations to enhance the proposals. Overall, the feedback appears broadly consistent with the UKEB comment letter[^43].

Derecognition of financial liabilities

E3. Most respondents agreed that settlement date accounting should be applied when recognising or derecognising financial assets and liabilities. However, many suggested further clarification was needed, for example, on how the requirements should be applied to derivatives and financial liabilities.

E4. Most respondents welcomed the proposal to permit derecognition of a financial liability settled in cash using an electronic payment system before the settlement date when specified criteria are met. However, some expressed concerns about the practical application of those criteria. In addition, some respondents requested similar requirements should be introduced for financial assets.

Assessment of the contractual cash flow characteristics of assets

E5. Many respondents welcomed the clarifications on assessing the contractual cash flow characteristics of assets.

E6. However, some respondents expressed concern that the proposals do not provide a clear basis for application. For example, many respondents observed that the proposed requirement in paragraph B4.1.10A of the ED that “the occurrence (or non-occurrence) of the contingent event must be specific to the debtor” would exclude ESG instruments with targets set at consolidated level. Many respondents further observed an apparent contradiction in paragraph B4.1.8A, between the assessment of interest, which focuses “on what an entity is being compensated for, rather than how much compensation an entity receives" and a change in contractual cash flows being “inconsistent with a basic lending arrangement if it is not aligned with the direction and magnitude of the change in basic lending risks or costs". Some respondents suggested alternative wording. Some IASB members particularly welcomed receiving specific recommendations.

E7. In addition, many respondents considered that the current proposals could have unintended consequences. For example, instruments that include an increased cost clause may no longer be considered consistent with a basic lending arrangement under these proposals.

Financial assets with non-recourse features and contractually linked instruments

E8. Most respondents supported the proposals in relation to the assessment of contractual cash flows in the case of financial assets with non-recourse features and contractually linked instruments. Many respondents asked for additional application guidance, for example, to clarify when secured lending arrangements qualify as contractually-linked instruments.

Disclosure requirements

E9. Most respondents welcomed the proposed amendments to the disclosure requirements for equity instruments presented in Other Comprehensive Income.

E10. In relation to the disclosure requirements for contractual terms that could change the timing or amount of contractual cash flows based on a contingent event specific to the borrower, many respondents, especially from the banking sector, considered that the proposed scope was too broad. Some respondents considered that some of the proposed requirements were already included within IFRS 7 Financial Instruments: Disclosures.

Transition

E11. Almost all respondents agreed with the proposal to apply the amendments retrospectively without being required to restate prior periods.

E12. Many respondents recommended allowing entities to initially apply the different parts of the amendments independently. Some respondents considered that the IASB should prioritise finalising the proposals in relation to the classification of financial assets with ESG-linked features.

Next steps

E13. The IASB plans to discuss the feedback further and redeliberate over the coming months. The next milestone as per the IASB workplan is a final amendment in H1 2024.

Appendix F: Business Combinations under Common Control

Background

F1. The IASB published its Discussion Paper DP/2020/2 Business Combinations under Common Control (BCUCC) in November 2020[^44], with a comment letter deadline of 1 September 2021. Since that date, the IASB has been discussing the feedback received on the topics set out in the DP and the plan for redeliberating the preliminary view.

F2. The current project objective[^45] is to develop reporting requirements for a receiving entity that would reduce diversity and improve the transparency of reporting BCUCCs. More specifically, the IASB aims to provide users of a receiving entity's financial statements with better information that is both:

1. more relevant—by setting up reporting requirements based on user information needs; and
2. more comparable—by requiring similar transactions to be reported in a similar way.

F3. The IASB is considering the project direction, including whether to move this from a research project to standard-setting[^46]. The IASB is exploring three options:

1. Option I—develop recognition, measurement and disclosure requirements (that is, do not change project direction). The IASB would then need to decide which specific recognition, measurement and disclosure requirements to develop, which might differ from the preliminary views in the Discussion Paper;
2. Option II—develop disclosure-only requirements; and
3. Option III—develop no recognition, measurement or disclosure requirements (that is, discontinue the project).

F4. The feedback given at the July ASAF meeting was that views from UKEB Board members were mixed but that, on balance, they thought that the BCUCC project should be discontinued and that the IASB should give priority to more relevant projects[^47].

Update

F5. The IASB met on 19 September 2023 to continue its discussion on the project direction based on feedback received, including from public meetings with the IASB consultative groups[^48] and meetings with other stakeholders, including regulators and users.

F6. The IASB was not asked to make any decisions at the meeting.

F7. A summary of the IASB's tentative decisions to date is included in Appendix B of Staff Agenda Paper 23 for the 19 September 2023 IASB meeting.

Next steps

F8. A decision on the project direction is expected in November 2023 (previously September 2023). IASB staff are expected to present updated analysis (including an overview of what a disclosure-only project could cover) and ask the IASB to decide:

1. whether to change project direction (that is, whether to remain with Option I); and
2. if the IASB decides to change project direction, whether to choose Option II or Option III.

Appendix G: Subsidiaries without Public Accountability: Disclosures

Background

G1. At its September 2023 meeting, the IASB staff summarised the approach to the forthcoming IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures (“subsidiaries Standard”).

G2. The IASB also discussed whether subsidiaries without public accountability should be required to disclose information that would be required by the IASB's tentative decisions on the project Business Combinations—Disclosures, Goodwill and Impairment.

Principles for reducing disclosures

G3. The IASB confirmed its commitment to applying the following principles for reducing disclosures when deciding whether to make amendments to the subsidiaries Standard:

1. short-term cash flows: users are interested in information about the entity's ability to meet its obligations;
2. liquidity: users are interested in information about the entity's ability to generate cash flows and continue as a going concern;
3. measurement uncertainty: users need information about how amounts in the financial statements are measured, including inputs (for example, significant judgements and estimates) used in those calculations;
4. disaggregation: users want information about the composition or details of movements of amounts in the financial statements; and
5. accounting policy choices: users are interested in the accounting policies applied by an entity, particularly when a standard offers more than one accounting policy option.

Approach to maintenance

G4. When the IASB issues a new or amended IFRS Accounting Standard that includes new or amended disclosure requirements, the Exposure Draft (ED) will also include proposed consequential amendments to the subsidiaries Standard.

G5. The approach agreed by the IASB to individual potential amendments can be summarised as follows:

1. Step 1—consider each of the proposed disclosures and review them against the principles for reducing disclosures.
2. Step 2—stratify the proposed disclosure requirements in new or amended IFRS Accounting Standards into the following groups:
   1. new requirements—assess using the principles for reducing disclosures;
   2. deletion of existing requirements in the subsidiaries Standard—the expected response would be to propose deletions from the subsidiaries Standard;
   3. amendment of requirements that are in the subsidiaries Standard—assess using the principles for reducing disclosures; and
   4. amendment of requirements that are not in the subsidiaries Standard—assess against the principles for reducing disclosures, considering IASB's relevant previous discussions and decisions not to include the disclosure requirement, to determine whether there is new information to warrant consideration of inclusion in the subsidiaries Standard.
3. Step 3: consider the relative costs and benefits of revised disclosure requirements in the subsidiaries Standard.
4. Step 4: assess the overall position that would be reached if any proposed new disclosure requirements were to be introduced to the subsidiaries Standard i.e. whether it would maintain the usefulness of financial statements to the users of eligible subsidiaries' financial statements while also being sufficiently appealing to those subsidiaries themselves.

"Catch-up Exposure Draft"

G6. When the IASB developed the Exposure Draft Subsidiaries without Public Accountability: Disclosures published in July 2021 it included disclosure requirements from IFRS Accounting Standards issued up to 28 February 2021.

G7. When the subsidiaries Standard is issued, disclosure requirements in other IFRS Accounting Standards issued subsequent to 28 February 2021 remain applicable and include disclosure requirements in:

1. IAS 1 Presentation of Financial Statements as a result of its Non-current Liabilities with Covenants project;
2. IAS 12 Income Taxes as a result of its International Tax Reform—Pillar Two Model Rules project;
3. IFRS 7 Financial Instruments: Disclosures and IAS 7 Statement of Cash Flows as a result of its Supplier Finance Arrangements project; and
4. IAS 21 The Effects of Changes in Foreign Exchange Rates as a result of its Lack of Exchangeability project.

G8. The IASB has confirmed that after the subsidiaries Standard is issued, new and amended IFRS Accounting Standards issued between 1 March 2021 and the date of issue of the subsidiaries Standard will be dealt with through a “catch-up Exposure Draft” which will propose new or amended disclosure requirements based on applying the agreed approach to maintenance.

G9. The IASB will also consider the forthcoming IFRS Accounting Standard 18 Presentation and Disclosure in Financial Statements, expected to be published in the first half of 2024, as part of the "catch-up Exposure Draft".

G10. Subsequent to this, on an ongoing basis, each new or amended IFRS Accounting Standard will include consequential amendments to the subsidiaries Standard so that the subsidiaries Standard remains up to date and eligible subsidiaries have reduced disclosure requirements available to them by the time they are required to apply a new or amended IFRS Accounting Standard.

Forthcoming exposure drafts

G11. The IASB expects to publish the Financial Instruments with Characteristics of Equity (“the FICE ED”) in the last quarter of 2023, before the issue of the subsidiaries Standard.

G12. The FICE ED will be the first ED to include proposed consequential amendments to the subsidiaries Standard. At the Board's July 2023 meeting the Secretariat provided an update on the proposed disclosure requirements in the FICE ED that the IASB tentatively decided to include as consequential amendments to the subsidiaries Standard[^49].

G13. In addition, the IASB has completed its redeliberations on its project Business Combinations—Disclosures, Goodwill and Impairment, and plans to issue an Exposure Draft (“the BCDGI ED”) in the first half of 2024.

G14. At its September 2023 meeting the IASB discussed whether it should require subsidiaries without public accountability to disclose information that would be required by the IASB's tentative decisions in this project.

G15. The table below lists the proposed disclosure requirements in the BCDGI ED that the IASB tentatively decided to include as consequential amendments to the subsidiaries Standard:

G16. The IASB also tentatively decided to ensure the wording of the disclosure requirement in the subsidiaries Standard in relation to paragraph B64(i) of IFRS 3 Business Combinations aligns with the proposals made by the IASB in the project on Business Combinations—Disclosures, Goodwill and Impairment rather than the current disclosure requirement of IFRS 3[^50].

Next steps

G17. The IASB staff will bring any matters that arise in drafting the subsidiaries Standard (for example, matters that may arise in updating the language of the subsidiaries Standard to be the same as the language in IFRS Accounting Standards) to the IASB as sweep issues.

G18. The IASB expects to issue the Standard in the first half of 2024.

G19. The Secretariat plan to present a Project Initiation Plan to the Board once the subsidiaries Standard has been issued.

[^51] The Subsidiaries ED (paragraph 36(g)) does not use the term 'major'. The IASB tentatively decided in the BCDGI project to amend paragraph B64(i) of IFRS 3 to remove the term 'major'.

Appendix H: Interpretations Committee update

Background

H1. The UKEB's Due Process Handbook notes that the UKEB expects to respond to a limited number of tentative agenda decisions published by the IFRS Interpretations Committee (Interpretations Committee). Some factors to consider when deciding whether to respond may be:

1. the degree of impact of the tentative agenda decision on UK companies (for example, in cases where the tentative agenda decision is expected to affect a significant number of UK companies);
2. disagreement with the Interpretation Committee's analysis; or
3. usefulness of the explanations and clarifications included in the tentative agenda decision.

H2. The Interpretations Committee held a meeting on 12 September 2023.

H3. The following tables summarise the current matters on the Interpretations Committee agenda.

*This provides a summary only, please review the IFRS Website for the full details