Minutes of UKEB Public Meeting 14 December 2023

The UKEB met for the public meeting on 14 December 2023. The recording of the meeting and the agenda papers have been made available on the UKEB's website.

PRESENT:

1. Welcome and Apologies

1. The Chair noted that the meeting was being recorded and the recording would be published on the UKEB website after the meeting.
2. The Board welcomed Mark Chandler, the new Official Observer from HM Revenue and Customs (HMRC), who has replaced Christopher Haworth as Official Observer.

2. Declarations of Interest

1. The Board noted the following declarations of interest:
   1. Phil Aspin's employer carries out rate-regulated activities.

3. Administrative Matters

1. The Board approved the minutes of the last meeting on 16 November 2023 for publication on the website, subject to minor typographical amendments. (Decision)

Influencing

4. Financial Instruments with Characteristics of Equity

1. The Board considered the preliminary analysis on the key proposals in the International Accounting Standards Board's (IASB) Exposure Draft (ED) Financial Instruments with Characteristics of Equity – Proposed amendments to IAS 32, IFRS 7 and IAS 1.
2. The Board noted that the initial review of the ED indicates that the proposals were broadly consistent with the UKEB's expectations. Preliminary feedback from various UKEB advisory groups was broadly in support of the proposals, which appears to clarify application issues that frequently arise, including addressing some areas where there is diversity in practice. There were several areas of possible concern identified by UKEB advisory groups in advance of the ED proposals, which will be the subject of further outreach by the Secretariat.
3. The Board considered five key topics in the ED proposals, as highlighted in the papers:
   1. the fixed for fixed condition;
   2. reclassifications;
   3. effects of laws and regulations;
   4. shareholders' discretion; and
   5. presentation and disclosure.
4. The Board considered the Secretariat's preliminary findings on the above topics. The initial findings and feedback received indicate that there should be no significant change in accounting practice as a result of the proposed amendments.
5. The Board noted the next steps and that the Draft Comment Letter will be presented at its January 2024 meeting.

5. Annual Improvements to IFRS Accounting Standards – Volume 11 – Final Comment Letter, Feedback Statement and [Draft] Due Process Compliance Statement

1. The Board considered the Final Comment Letter (FCL) on the International Accounting Standards Board (IASB)'s Exposure Draft (ED) Annual Improvements to IFRS Accounting Standards – Volume 11.
2. The Board noted that the one formal response received on the Draft Comment Letter was supportive of the UKEB's position. The UKEB had also received feedback and input from stakeholder outreach, including at the Preparer Advisory Group and the Accounting Firms and Institutes Advisory Group. It was noted that no significant concerns were raised during those discussions .
3. The Board approved the FCL for submission to the IASB. (Decision)
4. The Board approved the Feedback Statement, subject to its comments. The Board also approved the [Draft] Due Process Compliance Statement (DPCS). (Decision)
5. The final DPCS will be presented to the Board for noting at its January 2024 meeting.

Ongoing Monitoring of IASB Projects

6. IASB General Update

The Board received an update on various projects being considered by the IASB and IFRS Interpretations Committee:

1. ### Primary Financial Statements {: #section-6-a-primary-financial-statements }
   1. The Board discussed the IASB's tentative decisions in relation to issues arising during the balloting process of the forthcoming standard, IFRS 18 Presentation and Disclosure in Financial Statements.
   2. The tentative decisions relate to the role of the primary financial statements and the requirement to provide a 'useful structured summary' and the interaction with (a) the 'materiality' assessment; and (b) the aggregation and disaggregation requirements regarding the presentation of line items in a primary financial statement. The Secretariat also updated the Board on the IASB's tentative decisions on the scope of income and expenses that will be classified in the investing category.
   3. It was noted that the IASB is expected to publish IFRS 18 in Q2 2024. The plan is for the UKEB to present a Project Initiation Plan for the endorsement of IFRS 18 in Q1 2024.
2. ### Climate-related matters (including IFRS Interpretations Committee discussions) {: #section-6-b-climate-related-matters } #### Climate-related commitments (IAS 37)
   1. The IFRS Interpretations Committee received a submission at its November 2023 meeting to discuss and provide clarification on how IAS 37 Provisions, Contingent Liabilities and Contingent Assets would apply to climate-related commitments. The Committee decided that it will publish a tentative agenda decision (TAD) for consultation, which will outline how an entity applies IAS 37 to climate-related commitments.
   2. The Board agreed that the UKEB should consider the Interpretations Committee's TAD at its January 2024 meeting; the Board will be presented with a Draft Comment Letter for consideration at the meeting. It also agreed that some outreach work would be carried out with various UKEB advisory groups in advance of the January 2024 meeting. (Decision)
   #### Power Purchase Agreements (IFRS 9)
   1. IASB staff sought input from the IFRS Interpretations Committee (Committee) on potential standard setting solutions following its research on possible narrow-scope amendments to IFRS 9 in relation to accounting for power purchase agreements (PPAs). The IASB was in overall support of the IASB staff recommendations and agreed that it will consider proposals for an Exposure Draft for the project.
3. ### Climate-related and Other Uncertainties in the Financial Statements {: #section-6-c-climate-related-and-other-uncertainties } The IASB had sought guidance from the Accounting Standards Advisory Forum (ASAF) and IFRS Interpretations Committee on reporting climate-related matters and other uncertainties in the financial statements. ASAF, at its December 2023 meeting, considered the development and use of illustrative examples and educational material to provide clarity on disclosures for climate-related matters and other uncertainties.
4. ### IFRS Interpretations Committee Tentative Agenda Decision {: #section-6-d-ifrs-interpretations-committee-tentative-agenda-decision } The Board noted that IFRS Interpretations Committee had published its tentative agenda decision on the topic of 'Disclosures of revenues and expenses for reportable segments – Application of IFRS 8' at its November 2023 meeting.
5. The Board agreed at a previous meeting that the UKEB would not undertake any work on this matter. It was concluded that this matter does not appear to affect a significant number of UK companies. The Board decided that nothing has changed in that position and noted that this matter does not meet the UKEB's criteria for comment. (Decision)
6. ### Amendments to the Classification and Measurement of Financial Instruments {: #section-6-f-amendments-to-the-classification-and-measurement-of-financial-instruments } The Board noted the IASB's tentative decisions on derecognition of financial liabilities through electronic transfer, and equity instruments and other comprehensive income.

7. Advisory Groups Updates

1. The Board noted the following updates: Preparers Advisory Group (PAG) The main topics discussed at the PAG's November 2023 meeting included climate-related matters and primary financial statements. PAG members did not identify any particular costs or burdens on the preparation of financial statements from the proposed new IFRS standard on primary financial statements. Rate-regulated Activities Technical Advisory Group (RRA TAG) The main topics discussed at the RRA TAG's December 2023 meeting included: recent IASB decisions; enforceability; the totex mechanism; and the materiality of regulatory adjustments. The group also considered the impact of inflation on UK rate regulated companies and their financial statements.

8. Items for Noting

1. The Board noted the following papers:
   1. Sustainability Update
   2. Due Process Compliance Statement (DPCS): Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)

9. Any other business

1. There was no other business discussed.

The meeting ended at 13:00 hrs.