6 Provisions – Targeted Improvements

Project Type	Influencing
Project Scope	Moderate
Purpose of the paper	The purpose of this paper is to obtain the Board's approval for publication of the draft Comment Letter (DCL) and the accompanying Invitation to Comment (ITC) on the IASB Exposure Draft - Provisions-Targeted Improvements.

| Requirement | Analysis ## Appendix B: Draft Comment Letter {: #appendix-b }

Dr Andreas Barckow Chairman International Accounting Standards Board Columbus Building 7 Westferry Circus London E14 4HD

XX March 2025

Dear Mr Barckow

Exposure Draft IASB/ED/2024/8 Provisions – Targeted Improvements

1The UK Endorsement Board (UKEB) is responsible for endorsement and adoption of IFRS Accounting Standards for use in the UK and therefore is the UK's National Standard Setter for IFRS Accounting Standards. The UKEB also leads the UK's engagement with the IFRS Foundation on the development of new standards, amendments and interpretations. This letter is intended to contribute to the Foundation's due process. The views expressed by the UKEB in this letter are separate from, and will not necessarily affect the conclusions in, any endorsement and adoption assessment on new or amended international accounting standards undertaken by the UKEB.

2There are currently approximately 1,400 entities with equity listed on the London Stock Exchange that prepare their financial statements in accordance with IFRS.⁴ In addition, UK law allows unlisted companies the option to use IFRS and approximately 14,000 such companies currently take up this option.⁵

3We welcome the opportunity to provide comment on the International Accounting Standards Board (IASB)'s Exposure Draft (ED) Provisions – Targeted Improvements. To develop our [draft] response our work [to-date] has included in-house research and consultation with stakeholders in the UK, including academics, accounting firms and institutes, preparers and users of accounts. [Our work on these matters continues and will inform our final comment letter.]

4We welcome the IASB's efforts to improve the clarity of the requirements in IAS 37. This is a long-standing standard and over the years application challenges have arisen, resulting in the issuance of various IFRIC Interpretations and Agenda Decisions.

5Our main observations and recommendations are set out in the paragraphs that follow. Responses to the IASB's specific questions about the ED are included in the Appendix to this letter.

Provisions - recognition criteria

6Overall, we support the proposed amendments relating to the present obligation recognition criterion in IAS 37 paragraph 14(a). We consider the addition of separate requirements for each of the three distinct elements of the criterion (i.e. the obligation, transfer and past-event conditions) will enhance the clarity of the requirements, providing a more robust structure and greater rigour to the assessment.

7We welcome the proposed extensive amendments to the examples in the Guidance on implementing IAS 37 (Guidance). Updating the analysis of the existing examples to reflect the proposed amendments supports understanding of the intended application of the proposed requirements and should facilitate application of the concepts to different fact patterns. The addition of new examples is also welcome as is the consolidation of certain Agenda Decisions into this guidance.

8However, we have identified some areas where we consider that further work may be needed before the proposals are finalised:

1. We consider that the underlying principle behind the requirements in relation to obligations to transfer an economic resource only if an entity takes two (or more) separate actions is not clear. It is unclear from the guidance how an entity may go about separately identifying individual actions in order to apply the requirements to their specific circumstance. Clearly identifying the underlying principle and/or providing further application guidance would facilitate consistent application across a variety of fact patterns. [Appendix A paragraphs A13 - A19]
2. In relation to the transfer condition, we consider that further guidance is needed in the standard to support understandability of what constitutes a transfer as opposed to an exchange. This seems to be an inherently judgemental aspect and is made particularly complex by the fact that the terms 'transfer' and 'exchange' are used widely in IFRS with a variety of meanings. Not all usage is consistent with the proposals in the ED. Without further guidance there is therefore a risk of confusion and increased diversity in practice. [Appendix A paragraphs A8 – A12]
3. The analysis in some of the examples in the Guidance could be perceived as inconsistent or contradictory. In Appendix A we have identified these areas and provide recommendations that in our view would enhance the clarity and help reduce the risk of unintended consequences. [Appendix A paragraphs A17, A31 - A34]
4. The IASB has proposed limited editorial amendments to the section in IAS 37 'Application of the recognition and measurement rules Restructuring'. As proposed, some of the restructuring guidance could be perceived as confusing or inconsistent with other proposals in the ED. We therefore consider those requirements could be more helpful if they followed the new structure for the assessment proposed in the ED (i.e. disaggregating by obligation, transfer and past-event). [Appendix A paragraph A20]

Measurement

9We welcome the proposed clarification on the expenditure required to settle an obligation. This will reduce the risk of diversity in practice and enhance comparability. [Appendix A paragraphs A21 – A22]

10We also welcome the proposed requirement for an entity to use a discount rate represented by a risk-free rate with no adjustment for non-performance risk, when the time value of money is material. We support the IASB's rationale, as presented in the Basis for Conclusions BC75 – BC80, including that provisions within the scope of IAS 37 typically do not include an obligation for an entity to pay the counterparty compensation for accepting non-performance risk, the determination of a non-performance risk adjustment could be highly subjective and the outcome of including it can be counter-intuitive. We consider that the proposed clarification will reduce diversity in practice and enhance comparability. [Appendix A paragraphs A23 – A26]

If you have any questions about this response, please contact the project team at [email protected].

Yours sincerely

Pauline Wallace Chair UK Endorsement Board

Appendix A: Questions on IASB/ED/2024/8 Provisions – Targeted Improvements

Question 1-Present obligation recognition criterion

The IASB proposes:

• to update the definition of a liability in IAS 37 Provisions, Contingent Liabilities and Contingent Assets to align it with the definition in the Conceptual Framework for Financial Reporting (paragraph 10);
• to align the wording of the recognition criterion that applies that definition (the present obligation recognition criterion) with the updated definition of a liability (paragraph 14(a));
• to amend the requirements for applying that criterion (paragraphs 14A-16 and 72-81); and
• to make minor amendments to other paragraphs in IAS 37 that include words or phrases from the updated definition of a liability (Appendix A).

The proposals include withdrawing IFRIC 6 Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment and IFRIC 21 Levies (paragraph 108).

Paragraphs BC3-BC54 and BC86 of the Basis for Conclusions and Appendix A to the Basis for Conclusions explain the IASB's reasoning for these proposals.

Do you agree with these proposals? Why or why not? If you disagree, which aspects do you disagree with and what would you suggest instead?

Updating the definition of a liability

A1We support updating the definition of a liability in IAS 37 to align it with the definition in the Conceptual Framework. We agree that this could help preparers of financial statements when developing an accounting policy for a transaction that is not specifically addressed by any IFRS Accounting Standard, by removing the need to make a judgement about which definition to apply.

A2In addition, the updated definition provides the framework for the proposed amendments to the recognition criteria.

Provisions – recognition criteria

A3Overall, we support the proposed amendments relating to the present obligation recognition criterion in IAS 37 paragraph 14(a). We consider the removal of the obligating event definition and the proposed introduction of separate requirements for each of the three distinct elements of the criterion (i.e. the obligation, transfer and past-event conditions) will enhance the clarity of the requirements, providing a more robust structure for the technical analysis.

A4However, we have identified some aspects of the proposed amendments that in our view might benefit from further consideration or field testing:

No practical ability to avoid test

A5We believe this is an area where judgement would be needed. Although we appreciate that it would not be possible to provide application guidance for every possible scenario as to the intended meaning of no practical ability to avoid, we recommend the IASB further considers whether the requirements are sufficiently clear to enable this concept to be applied consistently.

A6Initial stakeholder engagement indicates that having the no practical ability to avoid test in two different aspects of the proposed amendments can be confusing. We understand that the proposed amendments introduce such a test in two subtly different ways:

1. A no practical ability to avoid test is one of the elements within the obligation condition. We understand this test is in effect a test of the 'strength of the mechanism' imposing the obligation.
2. The past-event condition also includes a no practical ability to avoid test (ED paragraph 14Q). This arises when two or more actions are needed to trigger the transfer of an economic resource. Here, however, we understand the test appears to relate not to the strength of the mechanism but to the realistic options available to management.

A7The interaction of the obligation and past event conditions can be confusing. We recommend the IASB describe more explicitly the difference between the two tests and how the test is intended to be applied when assessing the obligation condition and the past-event condition to facilitate consistent application.

Transfer/exchange of economic resources

A8The ED introduces an explicit distinction between a transfer and an exchange of economic resources. The proposals have brought attention to a distinction that stakeholders might not necessarily have assessed specifically in the past. This creates the risk of unintended consequences, including perhaps the reassessment of entities' existing obligations.

A9Stakeholder feedback also suggests that the distinction between the two concepts may not always be clear cut. For example, UKEB stakeholders have raised doubts over whether certain levies are transfers or exchanges. In addition, questions arise as to whether outsourcing the settlement of an obligation (to provide clean-up services, for instance, or staff training) can impact recognition by converting it into an exchange (compare examples 2A/2B and 7).

A10The amendment also begs the question as to how the proposal can be reconciled with the requirement in IFRS to capitalise within assets the costs recognised when certain provisions are made (for example decommissioning costs, see IAS 16.16-18). IAS 37 paragraph 8 states that "this Standard neither prohibits nor requires capitalisation of the costs recognised when a provision is made” and IFRIC 21 stated that an entity should apply other accounting standards to determine whether the recognition of the provision gives rise to an asset or expense.

A11This seems to be an inherently judgemental aspect of the proposals and is made particularly complex by the fact that the terms ‘transfer' and 'exchange' are used widely in IFRS with a variety of meanings. Not all usage is consistent with the proposals in the ED.

A12These challenges have been recognised in the past by IFRIC agenda papers which have set out the difficulties in assessing the difference between exchange and transfer⁶. We therefore recommend that further guidance is provided in the standard to support understandability and reduce the risk of diversity in practice. A possible approach could include signposting within IAS 37 the relevant concepts from the Conceptual Framework, accompanied by examples illustrating the analysis performed in reaching a conclusion. Some of the proposed examples, such as those illustrating levies, state whether the nature of the obligation is a transfer or exchange without explaining how such a conclusion might be reached.

Past-event condition

A13In withdrawing IFRIC 21 the proposed amendments would be applicable to all obligations in the scope of IAS 37, not only levies. The risk of unintended consequences needs to be considered.

A14For straightforward scenarios, the proposed amendments to the present obligation recognition criterion do not appear to present any particular difficulties. The conclusion is not so clear when applied to more complex fact patterns, such as certain levies, where an entity would need to consider the proposed requirements for obligations to transfer an economic resource only if an entity takes two (or more) separate actions.

A15We understand that the identification of the relevant actions(s) is not a question of management's judgement but based on the relevant ‘mechanism' imposing the responsibility on the entity. For example, it could be the terms and conditions of a contract, or in the case of a levy, such a mechanism would be the corresponding legislation.

A16We consider that the underlying principle behind the requirements in relation to obligations to transfer an economic resource only if an entity takes two (or more) separate actions is not clear. Clearly identifying the underlying principle and/or providing further application guidance would facilitate consistent application across a variety of fact patterns.

A17At present, it is difficult to rationalise precisely what leads to the identification of an 'action', and therefore to clearly understand the difference between some of the examples in the Guidance. For example:

1. Example 13A assumes that the generation of revenue in the market in 20X0 is an 'action'. However, given that the fact pattern notes that only entities operating in the market on 1 January 20X1 are within the scope of the levy, it could be argued that the generation of revenue during 20X0 is not an action but only the basis for measuring the obligation. We consider that the distinction between what is merely a measurement basis and what is considered to be an 'action' for purposes of the proposed amendments should be made clearer.
2. Example 13B considers that there are two distinct actions, that is, operating in the entity's current annual reporting period and operating as a bank on the last day of that same period. We consider it would be helpful to explain the rationale for the differences from:
   1. the proposed guidance for threshold-triggered costs (paragraph 14P), which assumes that the generation of revenue during a period represents only one action (as noted in view 3 in April 2024 - IASB staff Agenda Paper 22B); and
   2. the conclusion in Example 13C, where only one action is identified. By analogising to Example 13B, without further clarification it could be argued that ownership of the property throughout the year is an action and an assessment would be needed as to whether the entity has a practical ability to avoid ownership of that property as of year-end.

A18Further testing of the proposals is needed to identify whether the requirements can be applied consistently across different fact patterns and whether they lead to a sensible accounting outcome.

A19This is also applicable to the proposed requirements on threshold-triggered costs. In addition, the interaction of the requirements in proposed paragraphs 14P (threshold-triggered costs) and 14Q (obligations triggered only if an entity takes two or more separate actions) should be made clearer, for example, to indicate what would take precedence if both requirements seem relevant for the same fact pattern.

Application of the recognition and measurement rules – Restructuring

A20The IASB has proposed limited editorial amendments to the section in IAS 37 'Application of the recognition and measurement rules – Restructuring'. As proposed, some of the restructuring guidance could be perceived as confusing or inconsistent with other proposals in the ED. We therefore consider those requirements could be more helpful if they followed the new structure for the assessment proposed in the ED (i.e. disaggregating by obligation, transfer and past-event).

Question 2-Measurement - Expenditure required to settle an obligation

The IASB proposes to specify the costs an entity includes in estimating the future expenditure required to settle an obligation (paragraph 40A).

Paragraphs BC63 – BC66 of the Basis for Conclusions explain the IASB's reasoning for this proposal.

Do you agree with this proposal? Why or why not? If you disagree, what would you suggest instead?

A21We support the proposed clarification of the costs an entity includes in estimating the future expenditure required to settle an obligation. The proposed requirements will reduce diversity in practice and enhance comparability, resulting in more useful information for users of accounts.

A22However, further consideration should be given as to how the proposed amendment would be applied to certain obligations not settled by the provision of goods or services, such as legal claims.

Question 3-Discount rates

The IASB proposes to specify that an entity discounts the future expenditure required to settle an obligation at a rate (or rates) that reflect(s) the time value of money represented by a risk-free rate – with no adjustment for non-performance risk (paragraphs 47-47A).

The IASB also proposes to require an entity to disclose the discount rate (or rates) it has used and the approach it has used to determine that rate (or those rates) (paragraph 85(d)).

Paragraphs BC67-BC85 of the Basis for Conclusions and Appendix B to the Basis for Conclusions explain the IASB's reasoning for these proposals.

Do you agree with:

1. The proposed discount rate requirements; and
2. The proposed disclosure requirements?

Why or why not? If you disagree, what would you suggest instead?

A23We support the proposed amendment to require entities to discount the future expenditure required to settle an obligation at a rate (or rates) that reflect(s) the time value of money, represented by a risk-free rate with no adjustment for non-performance risk. The proposed requirements will reduce diversity in practice and enhance comparability.

A24We also support the IASB's decision for the reasons set out in the Basis for Conclusions BC75-BC80, including that:

1. provisions within the scope of IAS 37 typically do not include an obligation for an entity to pay the counterparty compensation for accepting non-performance risk;
2. non-performance risk is not observable and, therefore, any estimate of the adjustment required to reflect non-performance risk could be highly subjective; and
3. the outcomes of measuring a provision at an amount that reflects the entity's own credit standing can be counter-intuitive.

A25In this regard, we recommend the IASB considers whether paragraph 37 in IAS 37 should be amended to reflect the proposed new requirement: the proposed measurement requirement will result in a fulfilment value modified to exclude the effect of the possibility that the entity may fail to fulfil the liability (own credit risk), thereby resulting in more useful information, as explained in the Conceptual Framework paragraph 6.92.

A26We also support the proposed requirement to disclose the discount rate(s) used and the approach used to determine such rate(s). We believe the proposed disclosures would result in more useful information for users of accounts.

Question 4-Transition requirements and effective date

4(a) Transition requirements

The IASB proposes transition requirements for the proposed amendments (paragraphs 94B-94E).

Paragraphs BC87-BC100 of the Basis for Conclusions explain the IASB's reasoning for these proposals.

Do you agree with these proposals? Why or why not? If you disagree, which aspects do you disagree with and what would you suggest instead?

4(b) Effective date

If the IASB decides to amend IAS 37, it will decide on an effective date for the amendments that gives those applying IAS 37 sufficient time to prepare for the new requirements.

Do you wish to highlight any factors the IASB should consider in assessing the time needed to prepare for the amendments proposed in this exposure draft?

A27We broadly support the proposed retrospective application of the requirements, with the two exceptions in proposed paragraphs 94D and 94E, relating to the measurement requirements.

A28However, we have some concerns about the potential complexity introduced by proposing exceptions to be applied at two different dates:

1. The exception in relation to the costs an entity includes in the measurement of a provision is proposed to be applied as of the date of initial application (as defined in proposed paragraph 94B(b).
2. The exception in relation to the requirements on discount rates is proposed to be applied at the transition date (as defined in proposed paragraph 94B(a).

A29We understand the proposed exceptions are consistent with transitional provisions in previous IASB projects⁷, but we note that those were introduced at different times and were therefore not applied in combination. We recommend the IASB considers whether both exceptions should be applied at the same date (i.e. date of initial application or transition date).

Question 5- Disclosure requirements for subsidiaries without public accountability

The IASB proposes to add to IFRS 19 Subsidiaries without Public Accountability: Disclosures a requirement to disclose the discount rate (or rates) used in measuring a provision, but not to add a requirement to disclose the approach used to determine that rate (or those rates) (Appendix B).

Paragraphs BC101-BC105 of the Basis for Conclusions explain the IASB'S reasoning for this proposal.

Do you agree with this proposal? Why or why not? If you disagree, which proposal do you disagree with and what would suggest instead?

A30We support the proposed requirement in IFRS 19 to disclose the discount rate (or rates) used in measuring a provision.

Question 6- Guidance on implementing IAS 37

The IASB proposes amendments to the Guidance on implementing IAS 37 Provisions, Contingent Liabilities and Contingent Assets. It proposes:

1. to expand the decision tree in Section B;
2. to update the analysis in the illustrative examples in Section C; and
3. to add illustrative examples to Section C.

Paragraphs BC55-BC62 of the Basis for Conclusions explain the IASB's reasoning for these proposals.

Do you think the proposed decision tree and examples are helpful in illustrating the application of the requirements? If not, why not?

Do you have any other comments on the proposed decision tree or illustrative examples?

A31We support updating the decision tree in Section B of the Guidance on implementing IAS 37. It provides a useful visual aid of the proposed new recognition requirements.

A32Overall, we support the proposed amendments to the illustrative examples in the Guidance on implementing IAS 37. Presenting all examples under a similar structure analysing separately each of the three conditions in the first recognition criterion enhances clarity and facilitates comparison of the technical analysis and conclusions for the different fact patterns presented.

A33However, we consider the analysis in some of the examples could be perceived as inconsistent or contradictory. Refer to paragraphs A17 – A19 above.

A34Finally, the IASB should in our view consider whether the examples, currently in the Guidance, should be transferred to the main body of the standard. We expect the Guidance to be relied on heavily by preparers and auditors and, in effect, to take on the weight of authoritative requirements. Including them as an integral part of the standard, as application guidance, would give them an appropriate level of prominence and authoritative status. Other IFRS Accounting Standards, such as IFRS 9 Financial Instruments, provide precedents for such an approach.

Question 7-Other comments

Do you have comments on any other aspects of the proposals in the Exposure Draft?

Consequential amendment to IFRS 3 Business Combinations

A35We recommend the IASB considers whether an exception to the measurement principle in IFRS 3 is needed for provisions in scope of IAS 37. The interaction of the measurement requirements in IFRS 3 (fair value measurement) and the measurement requirements in IAS 37 (discount rates with no adjustment for non-performance risk), would result in a Day 2 impact to profit or loss.]

Appendix C: Invitation to Comment

Call for comments on the UKEB Draft Comment Letter on the IASB's Exposure Draft Provisions – Targeted Improvements

Introduction

The objective of this Invitation to Comment is to obtain input from stakeholders on the UKEB Draft Comment Letter (DCL) on the Exposure Draft (ED) Provisions – Targeted Improvements published by the International Accounting Standards Board (IASB) on 12 November 2024. The IASB comment period ends on 12 March 2025.

UK endorsement and adoption process

The UK Endorsement Board (UKEB) is responsible for endorsement and adoption of IFRS for use in the UK and therefore is the UK's National Standard Setter for IFRS. The UKEB also leads the UK's engagement with the IFRS Foundation (Foundation) on the development of new standards, amendments, and interpretations. This letter is intended to contribute to the IASB's due process. The views expressed by the UKEB in this letter are separate from, and will not necessarily affect the conclusions in, any endorsement and adoption assessment on new or amended International Accounting Standards undertaken by the UKEB.

Who should respond to this Invitation to Comment?

Stakeholders with an interest in the quality of accounts prepared in accordance with international accounting standards.

How to respond to this Invitation to Comment

Please download this document, answer any questions on which you would like to provide views, and return it together with the 'Your Details' form to [email protected] by close of business Monday 3 February 2025.

Brief responses providing views on individual questions are welcome, as well as comprehensive responses.

Privacy and other policies

The data collected through responses to this document will be stored and processed by the UKEB. By submitting this document, you consent to the UKEB processing your data for the purposes of influencing the development of and adopting IFRS for use in the UK. For further information, please see our Privacy Statements and Notices and other Policies (e.g. Consultation Responses Policy and Data Protection Policy)⁸.

The UKEB's policy is to publish on its website all responses to formal consultations issued by the UKEB unless the respondent explicitly requests otherwise. A standard confidentiality statement in an e-mail message will not be regarded as a request for non-disclosure. If you do not wish your signature to be published, please provide the UKEB with an unsigned version of your submission. The UKEB prefers to publish responses that do not include a personal signature. Other than the name of the organisation/individual responding, information contained in the “Your Details” document will not be published. The UKEB does not edit personal information (such as telephone numbers, postal or e-mail addresses) from any other response document submitted; therefore, only information that you wish to be published should be submitted in such responses.

Questions

Definition of a liability and recognition criteria

1. Overall, the UKEB's DCL supports the proposed amendments to the definition of a liability and to the recognition criteria for provisions. The UKEB's DCL also highlights some areas where further consideration might be needed and provides some recommendations. [DCL Paragraphs 4-8 and A1 – A19]

Do you agree with this position? Please explain why or why not.

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2. The IASB's ED proposes amendments to the present obligation recognition criterion including the introduction of a ‘transfer' condition. [ED paragraphs 141 - 14L] The proposals make an explicit distinction between a transfer and an 'exchange' transaction.

Do you consider the proposed requirements are clear and would allow consistent application across a variety of fact patterns? If not, what would you recommend instead?

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3. The IASB's ED proposes the introduction of a 'past-event' condition. [ED paragraphs 14M – 14R] As part of this, the ED also proposes specific guidance for obligations to transfer an economic resource only if the entity takes two (or more) separate actions [ED paragraph 14Q].

Do you consider the underlying principle behind the identification of the relevant 'action(s)' is clear and would facilitate consistent application across a variety of fact patterns? If not, what would you recommend instead?

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4. The IASB's proposes limited editorial amendments to the section in IAS 37 'Application of the recognition and measurement rules – Restructuring'. The UKEB DCL considers such guidance could be perceived as confusing or inconsistent with other proposals in the ED and recommends it is presented using the new structure for the assessment proposed in the ED (i.e. disaggregating by obligation, transfer and past-event).

Do you agree with this position? Please explain why or why not.

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Measurement – Expenditure required to settle an obligation

5. The UKEB's DCL agrees with the proposed clarification of the costs an entity includes in estimating the future expenditure required to settle an obligation but recommends further consideration on how the proposed amendment would be applied to certain obligations not settled by the provision of goods or services, such as legal claims. [DCL paragraphs 9 and A21 – A22]

Do you agree with this position? Please explain why or why not.

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Measurement – Discount rates

6. The UKEB's DCL agrees with the proposed amendment to discount the future expenditure required to settle an obligation at a rate (or rates) that reflect(s) the time value of money, represented by a risk-free rate with no adjustment for non-performance risk. The DCL also supports the proposed related disclosure requirements. [DCL paragraphs 10 and A23 – A26]

The UKEB's DCL also recommends a potential amendment to paragraph 37 in IAS 37 to reflect that the proposed measurement requirement will result in a fulfilment value modified to exclude the effect of the possibility that the entity may fail to fulfil the liability (own credit risk) [DCL paragraph A25]

Do you agree with this position? Please explain why or why not.

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Transition requirements

7. The UKEB's DCL agrees with the proposed transition requirements but recommends the IASB considers requiring the exceptions to retrospective application to be applied at the same date (i.e. date of initial application or transition date). [DCL paragraphs A27 – A29]

Do you agree with this position? Please explain why or why not.

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Disclosure requirements for subsidiaries without public accountability

8. The UKEB's DCL supports the proposed consequential amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures. [DCL paragraph A30]

Do you agree with this position? Please explain why or why not.

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Guidance on implementing IAS 37

9. The UKEB's DCL supports the proposed amendments to the decision tree in Section B and to the illustrative examples in the Guidance on implementing IAS 37. However, the DCL also highlights some perceived inconsistencies and makes some recommendations. [DCL paragraphs 8(c) and A31 – A34]

Do you agree with this position? Please explain why or why not.

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Consequential amendments to other IFRS Accounting Standards

10. The UKEB's DCL recommends the IASB considers whether an exception to the measurement principle in IFRS 3 Business Combinations is needed for provisions in scope of IAS 37. [DCL paragraph A35]

Do you agree with this position? Please explain why or why not.

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Other comments

11. Have you identified any factors the IASB should consider in assessing the time needed to prepare for the amendments proposed in the IASB's Exposure Draft? If so, please describe them below.

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12. Do you have any comments on the potential costs and benefits likely to arise from the proposed targeted improvements to IAS 37?

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13. Do you have any other comments on the IASB's Exposure Draft or the UKEB's DCL you would like to share?

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Thank you for completing this Invitation to Comment

Please submit this document by

Monday 3 February 2025 to

[email protected]

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Footnotes