9 IASB General Update

26 June 2025 Agenda Paper 9

Executive Summary

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).

Summary of the Issue

Topics addressed in this paper include topics discussed by the IASB at its May 2025 meeting as well as topics on the July 2025 ASAF agenda.

Topics for discussion

• Rate-regulated Activities
• Exposure Draft: Business Combinations–Disclosures, Goodwill and Impairment (ASAF questions)
• Provisions–Targeted Improvements

Topics for noting

• Climate-related and Other Uncertainties in the Financial Statements
• IFRIC update

Decisions and questions for the Board

Topics for discussion

Rate-regulated Activities (Appendix A)

1. Do Board members have any views on the IASB's tentative decisions on the minimum interest rate?
2. Do Board members have any comments or questions on the assessment of the expected benefits and costs of the prospective Standard that should be raised at ASAF?

Exposure Draft: Business Combinations—Disclosures, Goodwill and Impairment (Appendix B)

1. Further to the recommendation in the UKEB FCL, does the Board have any additional views on the design of a possible rebuttable presumption approach to identify business combinations, considering the aspects set out in paragraph B23?
2. Does the Board have any further views on improvements to, or the removal of, the operating profit threshold?

Provisions—Targeted Improvements (Appendix C)

Present Obligation Criterion

1. How do you think the IASB should move forward in the light of the feedback on levies? Do any of the solutions suggested by IASB stakeholders appeal to you and, if so, why? Conversely, do any of these solutions seem potentially problematic to you and, if so, why?
2. Do you have any views on how the IASB should move forward in respect of the feedback on other matters related to the present obligation criterion? Do any of the solutions suggested by IASB stakeholders appeal to you and, if so, why? Conversely, do any of these solutions seem potentially problematic to you and, if so, why?

Cost to include in the measure of a provision

1. How do you think the IASB should move forward in the light of the feedback summarised in IASB staff Agenda Paper 22D Costs?
2. In particular, do you have any views on whether and, if so, how the requirements should apply to ancillary costs?

Discount rates

1. How do you think the IASB should move forward in the light of the feedback summarised in IASB staff Agenda Paper 22E Discount Rates?

Other matters

1. Do you have any other comments on how the IASB should move forward in the light of the feedback on the Exposure Draft?

Topics for noting

Do board members have any comments or questions on the topics for noting?

IFRIC Update

• In the light of the IASB staff papers for the Interpretation Committee's meeting on 25 June 2025, and assuming there are no substantive changes to the conclusions once published, do Board members agree that the UKEB will NOT undertake any further work on these matters [Agenda decisions referencing IAS 1]?
• Do Board members agree that the UKEB will NOT undertake further work on the matters received but not yet presented to the Interpretations Committee at this time [Incremental transaction costs (IFRS 9), Assessing Whether to Separate an Embedded Prepayment Option from Host Contract (IFRS 9), Customer rights in offtake battery energy storage system arrangements]?

Recommendation

N/A

Appendices

• Appendix A: Rate-regulated Activities
• Appendix B: Exposure Draft: Business Combinations—Disclosures, Goodwill and Impairment
• Appendix C: Provisions—Targeted Improvements
• Appendix D: Climate-related and Other Uncertainties in the Financial Statements
• Appendix E: Interpretation Committee Update
• Appendix F: List of IASB projects

Appendix A: Rate-regulated Activities

UKEB project page

UKEB Final Comment Letter (published 4 August 2021)

Purpose

A1 At the May 2025 meeting, the IASB redeliberated sweep issues relating to its forthcoming standard for regulatory assets and regulatory liabilities (RARL Standard).

A2 The purpose of this paper is to provide an overview of the IASB's tentative decisions at its May 2025 meeting and the UKEB Secretariat's views, incorporating feedback from the UKEB Final Comment Letter (FCL) and UKEB Rate-regulated Activities Technical Advisory Group (RRA TAG).

A3 The paper also seeks Board member views ahead of the ASAF meeting in July 2025. The ASAF papers address the IASB's redeliberations in May 2025 and the IASB's draft Effects Analysis.

IASB May 2025 meeting

Sweep issues

Background

A4 At the May 2025 IASB meeting the IASB staff presented sweep issues identified during the drafting of the final standard.

A5 The main issue identified relates to the exemption from discounting that the IASB tentatively decided in July 2024. That exemption related to circumstances in which an entity is unable to estimate the timing of the future cash flows arising from a regulatory asset or a regulatory liability.

A6 When the IASB staff drafted this exemption, it received questions about the intended scope and whether it might raise questions about an entity's ability to estimate the timing of cash flows when applying other standards, for example, IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Staff started by considering examples of when the exemption might be required, and identified a simplifying assumption that they thought would help with the examples considered at the IASB's July 2024 meeting.

A7 However, the simplifying assumption, i.e. that market variables should be consistent with market prices at the measurement date, does not resolve all the difficulties illustrated by the examples presented to the Board. In particular, it became clear that a major problem was differentiating between future cash flows that relate to the difference in timing that exists at the measurement date and those relating to expected future changes in the difference in timing.

A8 The IASB staff therefore concluded that there is still a need for an exemption from discounting or considerable guidance to help entities to do the discounting in a comparable manner and that neither approach would be easy. In light of this, the staff developed alternative approaches and also noted that an entity would only need an exemption if the minimum interest rate requirements applied. If the requirements did not apply, the entity would simply discount at the interest rate specified in the regulatory agreement meaning that the discounted amount is the same as the total undiscounted cash flows excluding the interest cash flows.

Overview of possible approaches and staff recommendations1

A9 The IASB staff proposed four possible approaches to the exemption from discounting that had previously been presented to the IASB at its July 2024 meeting². The approaches were³:

1. Approach 1 - Retain the minimum interest rate requirements unchanged and develop a replacement for the existing exemptions from discounting or add guidance on estimating future cash flows.
2. Approach 2 - Remove the exemption from discounting and instead extend the existing exemption from the minimum interest rate requirements to items affecting regulated rates on a cash basis.
3. Approach 3 - Remove the minimum interest rate requirements, except in a few specified circumstances.
4. Approach 4 - Remove the minimum interest rate requirements completely.

IASB discussion

A10 IASB members shared the following views on the staff's proposals and recommendations:

1. The staff's recommendation under approach 4 works best as the proposals under approaches 1 and 2 would cause complexity in the standard.
2. The staff recommendation to remove the requirements relating to the minimum discount rate respond well to feedback the IASB has received on this issue. The proposed disclosures also still allow entities to provide useful information to users.
3. Staff recommendations make sense from a cost-benefit perspective.

A11 One member sought clarity on the proposal to remove the minimum discount rate and questioned whether an absence of the requirements would lead to entities still discounting the cash flows as the standard is silent on the issue. The staff clarified that the standard would not be silent as it would state that the discount rate is always the regulatory rate.

IASB tentative decisions

A12 The IASB tentatively decided that the prospective Accounting Standard would:

1. Include no requirements for a minimum interest rate.
2. Include a requirement for an entity to disclose quantitative information, using time bands, about when it expects to recover regulatory assets and fulfil regulatory liabilities. The entity would be required to disaggregate the quantitative information between regulatory assets and regulatory liabilities for which the regulatory agreement:
   1. provides or charges a regulatory interest rate; and
   2. does not provide or charge a regulatory interest rate.
3. Include a requirement for an entity to provide the quantitative information described in (b) using:
   1. undiscounted cash flows; and
   2. reasonable and supportable assumptions about the timing of future cash flows that are consistent between periods.
4. Clarify that assumptions about market variables used in the estimates of future cash flows:
   1. should be consistent with observable market prices at the measurement date; and
   2. should not take into account the effects of possible future changes in market variables
5. Include transitional requirements for interim financial statements.
6. Include no requirement for an entity to disclose whether it receives regulatory returns on an asset not yet available for use.

UKEB Final Comment Letter

A13 The UKEB FCL generally supported the proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities on the minimum discount rate. It suggested some further simplifications and noted that we had not identified any situation where an interest rate other than the regulatory interest rate would be required.

Feedback from UKEB RRA TAG

A14 During previous UKEB RRA TAG meetings, members expressed the view that, in most cases, the weighted average cost of capital (WACC) stipulated in the regulatory agreement is sufficient to compensate entities for the time value of money. It would therefore have been unlikely that UK entities would have needed to frequently consider the minimum discount rate. However, members expressed concerns that this requirement could potentially be an area of difficulty in times of uncertainty or when an entity is distressed or overperforming.

UKEB Secretariat views

A15 The UKEB Secretariat's view is that the IASB's tentative decision to omit the minimum discount rate requirements from the final Standard addresses the UKEB's concerns raised in its FCL as well as the RRA TAG's concerns.

Question for Board members

1. Do Board members have any views on the IASB's tentative decisions on the minimum interest rate?

Effects Analysis

July 2025 ASAF paper

A16 At the July 2025 ASAF meeting, in addition to the IASB tentative decisions discussed above, the IASB staff will be presenting the draft Effects Analysis of the prospective Standard and ask for ASAF members' views.

A17 The ASAF paper⁴ includes the following points:

1. Due to current diversity in application of IFRS 14 Regulatory Deferral Accounts, and so accounting practice, some entities currently recognise regulatory balances and whilst others do not. As a result, the effect of the new Standard is expected to be greater on the latter group of entities.
2. Additionally, the prospective Standard might have dissimilar effects on entities. For example, based on fieldwork participants' preliminary estimates, the expected impact on total assets, total liabilities and profit or loss might vary significantly among entities that are permitted to recognise regulatory assets, liabilities, income and expense:
   1. Regulatory assets/total assets—impact could range from below 5% and up to 30%.
   2. Regulatory liabilities/total liabilities—impact could range from below 5% and up to 40%.
   3. Regulatory income or regulatory expense/revenue from regulated activities—impact could range from below 5% or up to 40%.
3. Some highlights from the paper are reflected below:
   1. Slide 14 states:

      "Some entities whose regulatory capital base is not related to their property, plant and equipment expect to have significant unrecognised regulatory assets and unrecognised regulatory liabilities”.

   2. Slide 15 states:

      "The prospective Standard: [...] might affect non-GAAP measures by: [...] increasing their use to capture affects of rate regulation that might not be fully addressed by the prospective Standard.”

4. The paper concludes that the benefits of the prospective Standard are expected to outweigh its costs, including that users will benefit from better information, leading to better economic decision-making and decreasing costs of gathering information from other sources.

UKEB Secretariat views

Benefits

A18 One of the fundamental qualitative characteristics of the Conceptual Framework for Financial Reporting (the Conceptual Framework) is faithful representation. Paragraph 2.12 of the Conceptual Framework states:

"Financial reports represent economic phenomena in words and numbers. To be useful, financial information must not only represent relevant phenomena, but it must also faithfully represent the substance of the phenomena that it purports to represent. In many circumstances, the substance of an economic phenomenon and its legal form are the same. If they are not the same, providing information only about the legal form would not faithfully represent the economic phenomenon [...]"

A19 We note that the benefits set out on slide 16 are around complete information, understandability and comparability. It is not clear whether consideration was given to whether the prospective Standard is expected to lead to the information providing a faithful representation of the economic phenomena. We acknowledge that there are differences in the legal forms of regulatory regimes within and across jurisdictions. However, in line with the Conceptual Framework, the legal form of the regulatory agreements should not take precedence over reflecting the economic substance.

Benefits - observations

A20 Slide 31 notes the IASB received 34 completed surveys representing 30 entities in 22 jurisdictions. If the 30 entities are all preparers, the observations relating to benefits set out on slides 17 to 19 are limited and the usefulness and comparability of the reported information needs to be tested with other stakeholder such as users.

Comments received on limitations about usefulness of information

A21 On the limitation about the usefulness of information, slide 18 notes that "[...] the market already accounts for differences between the regulatory capital base and property, plant and equipment in the assessment of risk and earnings multiples." It would be important to determine what market is being referred to here e.g. specialist investors or the total market and whether this is the case across all jurisdictions. There should be an acknowledgement of the varying degrees of development of regulatory regimes across jurisdictions and that the degree to which the market accounts for these differences will depend on the regulatory requirements in jurisdictions.

Comments received about accessibility and understandability of the information by users

A22 We note that the paper does not mention the expected market effects and the interaction with capital markets such as the analysis the IASB did for IFRS 17 Insurance Contracts⁵. The effects on the wider economy should also be considered such as the usefulness of the information to generalist investors. If generalist investors cannot invest in these entities, it is unlikely that the cost of capital will decrease (it may even increase).

A23 Regulators in the UK determine an entity-specific weighted average cost of capital (WACC) to determine the entity's return on capital. This directly affects regulated rates. The cost of capital will affect the WACC and the regulated rates. This may mean that regulated rates charged to customers will not decrease (and may even increase as a result).

A24 Paragraph 3.80 of the IFRS Foundation's Due Process Handbook requires an assessment of the expected effect of a new standard on financial stability and volatility. It is not clear from the paper whether this was considered. It would be particularly important for emerging economies where there may be high dependence on a limited number of large utilities.

A25 Slide 19 notes that the prospective Standard will make information available that users might currently need to source elsewhere. We note that no mention is made of the fact that this information will be audited, which is another important expected benefit.

Comments received about comparability

A26 Slide 19 states that comparability might still be limited by differences in regulatory practices. More information is needed on what is meant by this statement. Does this imply the potential lack of recognition of regulatory assets and regulatory liabilities arising from the newly developed direct (no direct) relationship concept?

Costs for entities

A27 Slide 21 states that one type of implementation costs is systems and processes. This needs to be analysed at a more granular level, e.g. accounting systems, data handling processes and accounts preparation.

Costs identified for users and other stakeholders

A28 Slide 24 briefly mentions regulators. However, as this is a Standard for regulated entities, our view is that there should be a more detailed assessment of expected effects on regulators such as the analysis in the IFRS 17 Effects Analysis.

Overall assessment

A29 Slide 26 states that users will benefit from better information. However, the effects analysis was carried out in 2024. This was before the final wording of the prospective Standard had been developed. Our view is that this assessment is possibly incomplete given the significant decisions made by the Board since that date.

Estimated effects on UK entities

A30 Around 50% of respondents to the IASB's survey⁶ on the direct (no direct) relationship concept in September 2023 indicated that their entities would be in the 'no direct' category.

A31 All UK entities that are within the scope of the future Standard fall into the 'no direct relationship' category. This is not unique to the UK, with the results of a survey⁷ of European entities by EFRAG in 2023 indicating that 11 out of 23 respondents concluded they would be in the 'no direct relationship' category with a further four entities concluding they have a 'mixed' model.

A32 The IASB's effects analysis paper for ASAF appears to accept the issues with the proposed approach reported in the UKEB's letter⁸ to the IASB in July 2024:

1. Entities in the 'no direct relationship' category will not be permitted to recognise regulatory assets and regulatory liabilities for timing differences included in the RCB.
2. The likely effects on UK entities, specifically the unrecognised regulatory assets and regulatory liabilities, are expected to be significant.
3. The prohibition from recognising significant regulatory assets and regulatory liabilities will lead to the IFRS accounts not providing information that faithfully represents the underlying economics of these entities. As a result, UK entities would need to continue to utilise alternative performance measures to facilitate investor understanding of their financial information.

Question for Board members

1. Do Board members have any comments or questions on the assessment of the expected benefits and costs of the prospective Standard that should be raised at ASAF?

Appendix B: Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment

UKEB project page

UKEB Final Comment Letter (published 19 July 2024)

Background

B1 The IASB's objective in this project is to explore whether entities can, at a reasonable cost, provide users with more useful information about business combinations, to assist them making better decisions by helping them understand and assess:

1. the strategic rationale behind an acquisition;
2. how the acquired business is performing; and
3. whether the acquirer's management has been effective and efficient in using the entity's economic resources to acquire the business.

B2 The IASB published an Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment on 14 March 2024, which proposed amendments to two standards. Firstly, the Exposure Draft (ED) proposed adding disclosure requirements for business combinations to IFRS 3 Business Combinations; and secondly proposed updating IAS 36 Impairment of Assets, mostly to clarify or simplify existing requirements.

B3 The proposed amendments to IFRS 3 included:

1. adding disclosure objectives;
2. adding disclosure requirements, including:
   1. performance information about a business combination – requiring an entity to disclose information about the entity's acquisition-date key objectives and the related targets for a subset of business combinations (proposed to be called strategic business combinations) and the extent to which those key objectives and targets are met in subsequent periods;
   2. requiring an entity to disclose quantitative information about synergies expected to arise from a business combination (expected synergies) including a description of expected synergies by category, and for each category of synergies (i) the estimated amounts, or range of amounts, of the expected synergies, (ii) the estimated cost, or range of costs, to achieve these synergies; and (iii) the time from which the benefits from the synergies are expected to start and how long they are expected to last; and
   3. exempting, in specific circumstances, an entity from disclosing some of the information in paragraphs (i) and (ii) (proposed exemption); and
3. amending some other disclosure requirements in IFRS 3.

B4 The proposed amendments to the impairment test of cash-generating units containing goodwill in IAS 36, to help mitigate management over-optimism and shielding, and to reduce cost and complexity, included:

1. clarifying how an entity allocates goodwill to CGUs;
2. requiring an entity to disclose in which reportable segment a CGU or group of CGUs containing goodwill is included; and
3. changing how an entity calculates value in use (VIU) by removing the requirements:
   1. to exclude future restructurings and asset enhancement cash flows; and
   2. to use pre-tax cash flows and pre-tax discount rates.

B5 The ED also included proposed amendments to IFRS 19 Subsidiaries without Public Accountability.

UKEB response to Exposure Draft

B6 The IASB comment period for the ED closed on 15 July 2024. The IASB received 143 comment letters⁹ in response to the ED.

B7 The UKEB provided its response in a Final Comment Letter (FCL) on 19 July 2024¹⁰.

B8 The UKEB is broadly supportive of the package of proposed amendments to the disclosure requirements in IFRS 3 and to the impairment test in IAS 36. However, the UKEB's key recommendations included:

1. A principle-based approach to identifying the most important business combinations, including a rebuttable presumption approach. This approach would alleviate some of the concerns expressed by stakeholders that the exhaustive list of quantitative and qualitative thresholds (the closed threshold approach) proposed in the ED may not capture the most important acquisitions.
2. Adding a threshold of 10% of market capitalisation (should the threshold approach to identifying a subset of important acquisitions be retained).
3. Replacing the term 'strategic', which does not adequately reflect the nature of the acquisitions for which users are keen to obtain additional disclosures – preparers tell us that they only undertake acquisitions if they are strategic. Another term, such as 'major' or 'significant' may be more appropriate to describe this subset of the most important business combinations.
4. Clarifying that the proposed exemption would be used only in 'extremely rare cases'.
5. Introducing some disclosure requirements to address the risk that management use optimistic inputs when calculating value in use that could avoid or further delay the recognition of impairment losses.

Purpose of this paper

B9 The Board was last provided an update on this project in February 2025¹¹ following the IASB's review of feedback received on the ED at the IASB meetings in October 2024, December 2024 and January 2025.

B10 The purpose of this paper is:

1. to provide the Board with a further update of the status of the project, now that the IASB has started to redeliberate the proposals in the ED in February, March and April 2025; and
2. to ask for Board members' feedback to inform the meeting of the IASB Accounting Standards Advisory Forum (ASAF) on 8 July 2025 on the current IASB redeliberations of the ED.

B11 In July 2025, the IASB will seek ASAF members' views on:

1. a possible rebuttable presumption approach to identify the subset of the most important business combinations that will be subject to the additional proposed disclosures on performance information and expected synergies (see paragraphs B22–B26 below); and
2. improvements to, (or removal of), the operating profit threshold (see paragraphs B27–B35 below).

IASB tentative decisions

B12 The IASB began redeliberating the ED proposals in February 2025. A summary of the ED proposals, respondents' feedback and the IASB's discussions and tentative decisions during redeliberations can be found in Appendix A of March 2025 IASB staff paper 18.

Project objective and scope

B13 On 19 February 2025, the IASB redeliberated the project's objective and its approach to achieving that objective¹² and tentatively decided:

1. to retain the project's objective but to adjust its wording to reflect the stage of the project; and
2. to retain its approach to achieving the project objective (see paragraphs B1–B5 above).

Concerns regarding proposed performance and synergy disclosures

B14 On 19 March 2025, the IASB commenced redeliberation of the proposal to require entities to disclose information about performance of an acquisition and expected synergies. In particular, IASB members discussed conceptual concerns¹³ raised by respondents to the ED about requiring such information to be disclosed in the financial statements.

B15 IASB staff analysis concluded that these conceptual concerns would not preclude the IASB from further analysing and redeliberating the proposals. Given the significant

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to ask for Board members' feedback to inform the meeting of the IASB Accounting Standards Advisory Forum (ASAF) on 8 July 2025 on the current IASB redeliberations of the ED.

B11In July 2025, the IASB will seek ASAF members' views on:

1. a possible rebuttable presumption approach to identify the subset of the most important business combinations that will be subject to the additional proposed disclosures on performance information and expected synergies (see paragraphs B22–B26 below); and
2. improvements to, (or removal of), the operating profit threshold (see paragraphs B27–B35 below).

IASB tentative decisions

B12The IASB began redeliberating the ED proposals in February 2025. A summary of the ED proposals, respondents' feedback and the IASB's discussions and tentative decisions during redeliberations can be found in Appendix A of March 2025 IASB staff paper 18.

Project objective and scope

B13On 19 February 2025, the IASB redeliberated the project's objective and its approach to achieving that objective¹⁴ and tentatively decided:

1. to retain the project's objective but to adjust its wording to reflect the stage of the project; and
2. to retain its approach to achieving the project objective (see paragraphs B1 – B5 above).

Concerns regarding proposed performance and synergy disclosures

B14On 19 March 2025, the IASB commenced redeliberation of the proposal to require entities to disclose information about performance of an acquisition and expected synergies. In particular, IASB members discussed conceptual concerns¹⁵ raised by respondents to the ED about requiring such information to be disclosed in the financial statements.

B15IASB staff analysis concluded that these conceptual concerns would not preclude the IASB from further analysing and redeliberating the proposals. Given the significant interaction between various aspects of the proposals, the IASB is not making any decisions on this matter at this stage and the IASB decided to continue to redeliberate these proposed requirements in future meetings.

Performance information – subset approach

B16On 8 April 2025, the IASB discussed:

1. whether to continue with an approach to require disclosure of information about the performance of a business combination for only a subset of business combinations (Agenda Paper 18A 8 April 2025 IASB meeting);
2. how to identify the subset i.e. thresholds and other matters (Agenda Paper 18B 8 April 2025 IASB meeting); and
3. evidence-based feedback on the proportion of business combinations that would be captured as part of that subset using the thresholds proposed in the ED (Agenda Paper 18C 8 April 2025 IASB meeting).

B17The IASB members were not asked to make any decisions at the April 2025 meeting, but Board members shared thoughts on how they might proceed.

B18The IASB's intention with this performance information subset approach was to require information for investors for the most important business combinations, while addressing stakeholder concerns about the volume and cost of this information.

B19Following the 8 April meeting, the IASB staff are reconsulting on whether to include a rebuttable presumption in identifying the subset of business combinations for which disclosures would be required – under a rebuttable presumption approach, companies would not have to disclose performance information even when they exceeded the proposed thresholds, if those business combinations were not important enough.

B20The IASB plans to consult on application aspects and the cost-benefit balance of a possible rebuttable presumption approach, including:

1. how to design the basis for rebuttal (paragraph B23(b) below)—for example, how to describe or define the population of strategic business combinations;
2. whether to require an entity to consider rebutting the presumption and disclosing performance information for a business combination that does not meet the specified thresholds (paragraph B23(c) below);
3. whether to require an entity to disclose the fact and reason for any rebuttal (paragraph B23(d) below); and
4. whether the benefits of applying a rebuttable presumption approach (avoiding inappropriately capturing non-strategic business combinations) would outweigh the costs of doing so – a rebuttable presumption approach might be more difficult to apply, audit and enforce than the thresholds approach.

B21The IASB also plans to consult on whether to retain, remove or amend a proposed approach to identify the subset of business combinations by using an operating profit-based threshold. Many respondents had concerns with this threshold, so IASB staff will consult on:

1. whether this threshold is necessary (i.e. whether a threshold based on operating profit would identify business combinations for which it would be important for a user to receive performance information, and which would not have been identified by another threshold); and
2. whether using an average operating profit over a period, like three or five years, would alleviate concerns about volatility, and what the period for that average should be (for example, 3 years, 5 years or a different number of years).

Rebuttable presumption approach

B22Many respondents suggested applying a rebuttable presumption approach. These respondents suggest identifying thresholds (for example, the thresholds proposed in the ED) with a rebuttable presumption that performance information would be disclosed for a business combination meeting those thresholds¹⁶. This approach would avoid thresholds inappropriately capturing non-strategic business combinations within the scope of the disclosure requirements.

B23Some of these respondents suggested requiring an entity that rebuts the presumption to disclose the fact that it has rebutted the presumption and the reason for the rebuttal. Adopting a rebuttable presumption approach would require the IASB:

1. To develop a list of thresholds (the IASB could leverage the work done / being done on the thresholds approach to develop this list).
2. To design a basis on which an entity could rebut the presumption that performance information should be disclosed for a business combination meeting the specified thresholds. The IASB could design the basis for rebuttal by, for example:
   1. describing or defining the subset of business combinations for which performance information should be disclosed; or
   2. requiring entities to determine whether disclosing performance information would require undue cost or effort.
3. To consider whether to require an entity to consider rebutting the presumption and disclosing performance information for a business combination that does not meet the specified thresholds. This requirement might:
   1. help with enforcement and prevent potential abuse by allowing auditors and regulators to step in if there is evidence that information should be disclosed about a business combination not meeting the thresholds;
   2. increase the cost for preparers as an entity would need to assess each business combination for evidence for rebuttal; and
   3. increase the level of judgement required in applying this approach and thereby create tension among preparers, auditors and regulators;
4. To consider whether to require an entity that rebuts the presumption to disclose that it has done so and the reasons why. Requiring the disclosure of the fact and reason for rebuttal might:
   1. provide users with additional information for their analysis;
   2. highlight business combinations that users might wish to pay close attention to;
   3. give rise to commercial sensitivity concerns; and
   4. result in boiler-plate information.

B24During the April meeting the IASB members were overall supportive of exploring and consulting further on a rebuttable presumption approach. Some suggested that, to keep costs to preparers at a minimum, the rebuttable presumption approach did not need to be symmetric, and that an asymmetric or one-way approach (i.e. providing a company the option to rebut the presumption that an acquisition is 'strategic', if it meets one of the thresholds) was sufficient, since an entity can always choose to disclose more information in cases when an acquisition does not meet the threshold. If a rebuttal was pursued, it would be important to set the thresholds low enough.

B25In its response to the ED, the UKEB proposed a principle-based approach to identifying the most important business combinations, including a rebuttable presumption approach, as set out in paragraph A6–A10 of Appendix A and in the flowchart in Appendix B the UKEB's FCL, including disclosing the reason for the rebuttal.

B26The design of the UKEB suggestion focuses on the description of the relevant acquisitions currently set out in the Basis for Conclusions paragraph BC54¹⁷.

Question for the Board

1) Further to the recommendation in the UKEB FCL, does the Board have any additional views on the design of a possible rebuttable presumption approach to identify business combinations, considering the aspects set out in paragraph B23 above?

Threshold approach – operating profit

B27The IASB proposed three quantitative thresholds¹⁸ for identifying strategic business combinations. A business combination would be a strategic business combination if:

1. in the most recent annual reporting period before the acquisition date:
   1. the absolute amount of the acquiree's operating profit or loss is 10 per cent or more of the absolute amount of the acquirer's consolidated operating profit or loss; or
   2. the acquiree's revenue is 10 per cent or more of the acquirer's consolidated revenue; or
2. the amount recognised as of the acquisition date for all assets acquired (including goodwill) is 10 per cent or more of the carrying amount of the total assets recognised in the acquirer's consolidated statement of financial position as at the acquirer's most recent reporting period date before the acquisition date.

B28The IASB proposed two qualitative thresholds¹⁹ for identifying strategic business combinations. A business combination would be a strategic business combination if the business combination resulted in the acquirer entering a new major line of business or geographical area of operations.

B29With regard to the quantitative thresholds, IASB staff suggest the IASB retain both the revenue and asset measures because:

1. only a few respondents expressed concerns about using these two measures;
2. as noted in paragraph BC64, these measures are defined in IFRS Accounting Standards and are commonly used in regulations;
3. although revenue can sometimes be volatile (for example, when there is significant fluctuation in commodity prices), revenue is generally less volatile than operating profit;
4. for the asset measure, while the acquired assets might be measured differently from the acquirer's existing assets, these measures are readily available to the acquirer whereas alternatives (for example, the fair value of the acquirer's existing assets) may be costly to determine; and
5. it would be important to have thresholds to capture business combinations that comprise a significant portion of the entity's total assets or total revenues.

B30IASB will discuss the percentage at which to set the thresholds at a future IASB meeting.

B31However, many respondents said an entity's operating profit may be volatile²⁰. Using operating profit as a measure could result in an immaterial business combination being classified as strategic because the operating profit of the acquirer in the base period is unusually low.

B32Many respondents suggested changes, including:

1. using the average operating profit over the past few annual reporting periods instead of only the most recent annual reporting period;
2. removing the quantitative threshold for operating profit;
3. allowing an entity to adjust operating profit or revenue for unusual items; and
4. excluding amounts attributable to non-controlling interests.

B33IASB staff do not agree with suggestions c) and d) as:

1. it would be difficult to define what constitutes an 'unusual' item. As paragraphs BC407–BC413 of the Basis for Conclusions to IFRS 18 Presentation and Disclosure in Financial Statements explain, the IASB considered requiring entities to disclose unusual items when developing IFRS 18 but decided not to do so because there is no single accepted definition of 'unusual income and expenses' and it would be difficult to develop such a definition on a timely basis; and
2. users of an entity's financial statements include stakeholders other than owners of the entity (such as an entity's potential investors, lenders and other creditors) and a measure representing ‘operating profit attributable to owners of the entity' may not be useful to them.

B34At the 8 April IASB meeting, most members disagreed with using an average operating profit threshold and some supported the removal of the operating profit threshold.

B35The UKEB in its response to the ED (see paragraph A18–A20 of the UKEB FCL), noted the volatility of the operating profit threshold, and considers that a principle-based approach would alleviate some of those concerns.

Question for the Board

2) Does the Board have any further views on improvements to, or the removal of, the operating profit threshold?

Other considerations

B36IASB staff believe additional threshold measures²¹, including market capitalisation as suggested by the UKEB, should not be considered. With respect to market capitalisation, consistent with paragraph BC64 and BC66 of the Basis for Conclusions, the IASB staff consider that:

1. the measure may not be relevant for all entities; and
2. the threshold based on total assets has been designed to function in a similar way to one based on the value of the entity. The total asset threshold requires an entity to use the value of all assets recognised by the acquirer as part of the business combination (including goodwill), instead of using total assets recognised by the acquiree before the acquisition.

B37The need for qualitative thresholds may depend on the approach agreed by the IASB to identify the subset of business combinations for which performance information would be required. For example, if the IASB decides to pursue a rebuttable presumption approach, the basis for the rebuttal could influence the need for any qualitative thresholds.

B38IASB staff acknowledged users' requests for receiving performance information about a series of business combinations²² entered into to achieve the same strategic objective(s) but think developing and applying requirements to identify such a series of business combinations may be difficult. At the April meeting, IASB members expressed mixed views on this proposal but agreed to consult on this matter. It was noted that clarification was needed that a series means a number of different acquisitions, as opposed to step acquisitions of the same acquiree).

B39Regarding concern with the use of the term “strategic" for the subset of the most important business combinations, depending on the approach the IASB takes to identify the subset (that is, a threshold approach, rebuttable presumption approach, etc), it may not be necessary to use a term to describe that subset. For example, in a threshold approach, the IASB could simply list the thresholds and require an entity to disclose performance information for a business combination that meets those thresholds without using a term to describe such business combinations. The IASB will assess whether to label the subset and, if so, what that label should be, after developing the approach to use in identifying the subset of business combinations.

Academic evidence

B40While findings²³ from the different evidence-based sources show some variation:

1. the proposed thresholds would result in capturing only a 'subset' of all business combinations—that is, the proposed thresholds would not result in entities being required to disclose performance information for all or almost all of their business combinations; and
2. despite the limitations of the academic study²⁴, the results of the study are within the range the IASB previously considered.

B41Overall, it was considered that the key thing was to capture the appropriate group of most important acquisitions in the subset, and that the percentage of coverage was not an important statistic, especially given the volatility of M&A activity year on year.

Next steps

B42Going forward, the IASB will use feedback from the planned consultations, as well as feedback from the April 2025 IASB meeting, to make tentative decisions in future IASB meetings.

B43The IASB will continue to redeliberate the proposals, including other aspects of the requirements for an entity to disclose performance and expected synergy information (expected from June 2025). The IASB will redeliberate other proposals as and when time permits. This is a complex project with several interdependencies, so redeliberations are expected to continue into 2026. The Board plans to make tentative decisions before voting on the entire package of proposals.

B44The UKEB Secretariat will continue to monitor the IASB's redeliberations and tentative decisions and will provide the Board with updates in due course.

Appendix C: Provisions – Targeted Improvements

UKEB Project Page

UKEB Final Comment Letter (published 12 March 2025)

Purpose of this paper

C1The purpose of this paper is to seek Board member views ahead of the July 2025 ASAF meeting. We anticipate that ASAF members will be asked for advice in relation to the direction of the project Provisions – Targeted Improvements.

C2It is important to highlight that the IASB is interested in ASAF members' views on how the IASB should move forward with this project in the light of the feedback from all respondents, rather than in obtaining ASAF members own feedback on the proposals (which already has been reflected in the IASB staff feedback summaries).

Background

C3In November 2024, the IASB published its Exposure Draft Provisions - Targeted Improvements proposing amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The UKEB submitted its Final Comment Letter to the IASB on 12 March 2025.

C4At its June 2025 meeting, the IASB discussed feedback on its Exposure Draft. The IASB was not asked to make any decisions at that meeting. Stakeholder feedback is summarised in the following IASB staff agenda papers:

1. 22 Feedback overview
2. 22A Present Obligation Criterion - Overall
3. 22B Present Obligation Criterion - Past-event condition
4. 22C Present Obligation Criterion - Other requirements
5. 22D Costs
6. 22E Discount rate
7. 22F Other matters

Questions for Board members

C5The Board is asked for feedback in relation to the questions for ASAF members ahead of the July 2025 ASAF meeting.

C6To facilitate Board discussion, the tables following the ASAF questions reproduce relevant feedback submitted to the IASB in the UKEB Final Comment Letter (UKEB FCL) as well as feedback submitted by other stakeholders (as summarised by the IASB staff in June 2025 Agenda Papers, refer to paragraph A4 above).

Present Obligation Criterion

Questions for the Board

1. How do you think the IASB should move forward in the light of the feedback on levies summarised in Agenda Papers 22A Present Obligation Criterion - Overall and 22B Present Obligation Criterion - Past-event condition? In particular:
2. do any of the solutions suggested by respondents in paragraph 18 of 22A Present Obligation Criterion - Overall (and further explained in paragraphs 28–32 of Agenda Paper 22B Present Obligation Criterion - Past-event condition) appeal to you and, if so, why?
3. conversely, do any of these solutions seem potentially problematic to you and, if so, why?

2. Do you have views on how the IASB should move forward in respect of the feedback on other matters summarised in Agenda Papers 22 Feedback - Overview and 22A Present Obligation Criterion - Overall to 22C Present Obligation Criterion - Other requirements? In particular:

1. do any of the solutions suggested by respondents in paragraph 16 and paragraph 24 of Agenda Paper 22C Present Obligation Criterion - Other requirements appeal to you and, if so, why?
2. conversely, do any of these solutions seem potentially problematic to you and, if so, why?

Feedback on levies (Question 1)

Feedback on levies

UKEB Final Comment Letter We therefore recommend the IASB reconsiders its approach to improving the recognition criteria in IAS 37. We are not aware of significant diversity in practice in the application of IFRIC 21 *Levies

• and we consider it is now well understood by stakeholders. In our view, the IASB should therefore assess whether the accounting for levies could be addressed more effectively if considered separately from the accounting for non-levy obligations. We consider the IASB's immediate focus should be on the clarification of the requirements relevant for non-levy obligations that have given rise to application challenges in the past. [UKEB FCL Cover Letter - Paragraph 9]

IASB staff summary – Exposure Draft (ED) feedback

Paragraph 18 22A Present Obligation Criterion - Overall

Respondents who express concerns about the implications of the proposed requirements for levies suggest various solutions:

1. some respondents suggest improving the requirements proposed in the ED:
   1. specifying simpler application requirements for levies, for example by specifying that for levies, the 'action' that satisfies the past-event condition is the activity the government is seeking to tax (as explained further in 22B Present Obligation Criterion - Past-event condition); or
   2. developing 'robust' application requirements and guidance for levies.
2. a few respondents suggest the IASB continue its work to finalise the proposed amendments but exclude levies (and other non-reciprocal transactions) from the scope of IAS 37, and either:
   1. leave IFRIC 21 in place; or
   2. develop a separate Standard for levies (and other non-reciprocal transactions). Respondents advocating a separate Standard argue that requirements proposed in paragraphs 14P and 14Q of the Exposure Draft 'appear to introduce rules to accommodate the non-reciprocal nature of levies and taxes' that could conflict with other requirements in IAS 37. They say that because these requirements are not confined to levies and taxes, they could lead to diversity in practice for other types of transactions.
3. a few respondents suggest abandoning the proposed amendments to IAS 37, some saying the IASB could address the current weaknesses in levy accounting by reviewing the requirements of, or adding disclosure requirements to, IFRIC 21.

The above feedback is further explained in paragraphs 28–32 of Agenda Paper [22B Present Obligation Criterion

• Past-event condition](https://www.iasb.org/content/dam/iasb/meeting-documents/2025/june/ap-22b.pdf). For purposes of brevity those paragraphs have not been reproduced in this paper.

Secretariat's preliminary observations

C7IASB staff Agenda Paper 22 Feedback overview notes that many respondents expressed outright or broad agreement with the proposed amendments to the present obligation criterion. However, it also notes that many of the respondents who expressed broad agreement overall go on to disagree with, and suggest changes to, specific aspects of the proposed requirements.

C8Some respondents expressed such major concerns about aspects of the proposed amendments to the present obligation criterion that the IASB staff classified those respondents as disagreeing with those amendments as a whole. These stakeholders are primarily European banks and their representative bodies, standard setters and accountancy bodies. They also include some of the global accounting firms. A key area of concern for them was in relation to levies.

C9In summary, stakeholder views in relation to the proposed Present Obligation Criterion requirements were diverse and there was no clear consensus. This can be observed from the fact that the IASB staff feedback summary does not reflect feedback from 'almost all,' 'most' or 'many' stakeholders²⁵. Feedback reflected (table above) was received from 'some' and 'a few' respondents.

C10View b) reflected above is aligned with the UKEB's recommendation to the IASB. The Secretariat continues to believe that a sensible approach would be for the IASB to continue its work in relation to the requirements for non-levy obligations and revisit the amendments for levies at a later stage, perhaps as a separate project for levies and other non-reciprocal transactions.

C11In the Secretariat's view, the number of concerns raised by stakeholders is an indication that further work is needed in relation to the proposed amendments relevant for levies. We also consider that addressing the accounting for levies is not a matter of particular urgency, given that as noted in the UKEB FCL we are not aware of diversity in practice in the application of IFRIC 21 and consider it is now well understood by stakeholders. One difficulty of following this approach, however, is that the IASB would need to find a way of continuing to require the application of IFRIC 21, even after some of the IAS 37 paragraphs on which the interpretation is based had been modified or removed as a result of the amendments to non-levy obligations.

C12The Secretariat considers that view c) would be the least desirable, as potential improvements to the accounting for non-levy obligations could be lost if the proposals were abandoned altogether.

C13In relation to view a), the Secretariat considers that:

1. View a)(i) – Simplifying the application requirements for levies, for example, by requiring all levies charged annually to be recognised progressively over the year for which they are being charged (as noted in paragraph 28 of IASB Agenda Paper 22B Present Obligation Criterion - Past-event condition) might be too simplistic and might not result in relevant information as it might not fully reflect the economic substance of the levies in all circumstances. In addition, such an approach might not fully reflect (or be consistent with) the overall principles and concepts in IFRS Accounting Standards and the Conceptual Framework for Financial Reporting.
2. View a)(ii) -If the IASB were to develop ‘robust' application requirements and guidance, the Secretariat continues to believe that there are a number of concerns that need to be addressed by the IASB, as presented in paragraphs A1–A46 and A62–A67 of the UKEB FCL and reflected in feedback from other stakeholders. This is therefore likely to result in a significant amount of further work for the IASB.

Feedback on other matters (Question 2)

Feedback on other matters

UKEB Final Comment Letter

Feedback in relation to Exposure Draft paragraph 14F(a)(ii) – Criteria for identifying legal obligations In addition, we note that the IASB proposes to replace the requirement in IAS 37 paragraph 17 that a legal obligation can be 'enforced by law' with a more detailed description of circumstances in which an entity would have no practical ability to avoid discharging a legal obligation. ED paragraph 14F introduces a form of economic compulsion in the 'no practical ability to avoid test' for legal obligations. The test requires an assessment of whether the economic consequences for the entity of not discharging the legal responsibility are expected to be *significantly worse

• than the costs of discharging it. [UKEB FCL - Paragraph A6] The proposed requirement has raised questions as to whether such an assessment should impact the recognition or only the measurement of a provision. For example, if the economic consequences for the entity of not discharging a legal responsibility were not expected to be significantly worse, but perhaps were expected to be *similar to or lower than

• the costs of discharging it, we believe that the entity would still have an obligation. The impact of the proposed assessment in paragraph 14F(a)(ii) should then be reflected in the measurement of the provision (assuming all the recognition criteria were met). We recommend the IASB clarifies the proposed requirement. [UKEB FCL - Paragraph A7]

In addition, the proposals introduce the need for judgement as to what is considered to be 'significantly worse'. Although the proposed description is based on concepts in paragraph 4.34 of the Conceptual Framework, we observe that the terminology is not consistent. CF 4.34 uses the term 'significantly more adverse' and the ED 14F(a)(ii) ‘significantly worse'. If the IASB decides to proceed with this proposal, we recommend aligning the terminology used and providing further guidance as to the intended application of this amendment. [UKEB FCL – Paragraph A7]

Feedback in relation to Exposure Draft paragraph 14G – Proposed new laws that have yet to be finalised

The UKEB FCL did not specifically comment on proposed paragraph 14G of the Exposure Draft.

IASB staff summary – Exposure Draft feedback

Feedback in relation to Exposure Draft paragraph 14F(a)(ii) – Criteria for identifying legal obligations

Paragraph 16

Respondent suggestions for alternatives to the amendments proposed in the Exposure Draft

Respondents suggest ways of capturing all the obligations they think should be captured:

1. some respondents suggest changing the 'no practical ability to avoid' criteria so that it is sufficient that a responsibility is legally enforceable – that is, that the counterparty has the right to use the courts to force the entity to either discharge the responsibility or pay penalties or compensation for failing to discharge it. The requirement to consider the economic consequences of non-compliance would then apply only to laws and regulations that, although not legally enforceable, include other incentives to encourage or discourage particular behaviours – so called 'soft law'.
2. a few respondents instead suggest retaining the requirement in paragraph 17 of IAS 37 that settlement of a legal responsibility can be enforced by law (a key concept in many standards) but stating that assessing whether the requirement is met will require the exercise of judgement in some circumstances (for example, in relation to soft law). Respondents who advocate retaining the existing requirement argue that, although the IASB should follow developments like the emergence of soft law, it should monitor their effects before deciding in light of experience whether it is necessary to modify accounting standards.

Feedback in relation to Exposure Draft paragraph 14G – Proposed new laws that have yet to be finalised

Paragraph 24

Respondents suggest alternatives:

1. some respondents, including most of the preparers commenting on this matter, suggest amending paragraph 14G to sate that an obligation arises only when legislation has been enacted. They say this approach would improve comparability, reduce subjectivity and lower the risk of recognising provisions for obligations that may never arise.
2. others suggest:
   1. aligning the threshold in IAS 37 with the substantively-enacted threshold in IAS 12 (and providing more guidance on interpreting the substantively-enacted threshold).
   2. providing more guidance on interpreting the virtually-certain threshold, including on whether and how it differs from the substantively-enacted threshold in

those material acquisitions with the same strategic rationale; and

whether or not an entity considers this series of acquisitions with the same strategic rationale to be 'strategic', and if so, disclose the key objectives for that series at the acquisition date of the first in the series.

This will ensure that:

1. users receive a full picture of 'strategic' acquisitions undertaken by the entity; and
2. the disclosures reflect how management will monitor the combined businesses with a similar objective e.g. increase in market share in a specific geographical area.

The UKEB also recommends that the IASB should consider and address how a company might disclose a series of 'strategic' acquisitions where they occur over different reporting periods.

| alternatives to the amendments proposed in the Exposure Draft

Paragraph 16 and 24 22C Present Obligation Criterion - Other requirements |

1. some respondents suggest changing the 'no practical ability to avoid' criteria so that it is sufficient that a responsibility is legally enforceable – that is, that the counterparty has the right to use the courts to force the entity to either discharge the responsibility or pay penalties or compensation for failing to discharge it. The requirement to consider the economic consequences of non-compliance would then apply only to laws and regulations that, although not legally enforceable, include other incentives to encourage or discourage particular behaviours – so called 'soft law'.
2. a few respondents instead suggest retaining the requirement in paragraph 17 of IAS 37 that settlement of a legal responsibility can be enforced by law (a key concept in many standards) but stating that assessing whether the requirement is met will require the exercise of judgement in some circumstances (for example, in relation to soft law). Respondents who advocate retaining the existing requirement argue that, although the IASB should follow developments like the emergence of soft law, it should monitor their effects before deciding in light of experience whether it is necessary to modify accounting standards.

Feedback in relation to Exposure Draft paragraph 14G – Proposed new laws that have yet to be finalised

Paragraph 24
Respondents suggest alternatives:

1. some respondents, including most of the preparers commenting on this matter, suggest amending paragraph 14G to sate that an obligation arises only when legislation has been enacted. They say this approach would improve comparability, reduce subjectivity and lower the risk of recognising provisions for obligations that may never arise.
2. others suggest:
   1. aligning the threshold in IAS 37 with the substantively-enacted threshold in IAS 12 (and providing more guidance on interpreting the substantively-enacted threshold).
   2. providing more guidance on interpreting the virtually-certain threshold, including on whether and how it differs from the substantively-enacted threshold in IAS 12.
   3. requiring entities to disclose management's judgements in reaching its conclusions on whether the virtually-certain threshold has been met.

|

Secretariat's preliminary observations

C14The Secretariat agrees with some aspects of the comments in paragraphs 14 and 15 of IASB staff Agenda Paper 22C Present Obligation Criterion - Other requirements, that if a responsibility can be enforced by law, the conclusion on whether that responsibility is an obligation should not depend on an assessment of the expected economic consequences of failing to discharge the responsibility. Instead, those economic consequences should be considered in applying the requirement in paragraph 14(b) of IAS 37 that it is probable that an outflow of economic resources will be required to settle the obligation (the probable outflows criterion) and in the measurement of the obligation.

C15This view aligned with the recommendation in the UKEB FCL paragraph A7, where we recommended that an assessment of the economic consequences should be reflected in the measurement of the provision (assuming all the recognition criteria were met).

C16View a) may therefore be the more appropriate approach.

C17In the Secretariat's view, retaining existing paragraph 17 in IAS 37 - view b) - would maintain the status-quo and risk perpetuating any lack of clarity in this aspect of the 'Past-event' condition in IAS 37.

Paragraph 24

C18As noted above, the UKEB FCL did not specifically comment on proposed paragraph 14G of the Exposure Draft.

C19In the Secretariat's view, the IASB should align the wording of the proposed requirements with the substantively-enacted threshold in IAS 12, as that is well-established. The IASB could also consider providing more guidance on interpreting the substantively-enacted threshold, that is, view b(i), to the extent that is needed.

Cost to include in the measure of a provision

Questions for the Board

3How do you think the IASB should move forward in the light of the feedback summarised in IASB staff Agenda Paper 22D Costs?

4In particular, do you have any views on whether and, if so, how the requirements should apply to ancillary costs?

Feedback on costs

UKEB Final Comment Letter

We support the proposed clarification of the costs an entity includes in estimating the future expenditure required to settle an obligation. However, we consider that further application guidance and examples should also be provided to facilitate consistent application [UKEB FCL paragraph A48] In particular, we believe the IASB should clarify whether the proposed amendment would be applicable to all provisions or only those to be settled by providing goods or services. [UKEB FCL paragraph A49] If the proposed amendment is applicable to all provisions, we consider that guidance is needed on how the requirements would be applied to obligations not settled by the provision of goods or services, such as legal claims, where it is our understanding that diversity in practice currently exists. Some entities consider external legal costs to be a separate unit of account – an executory contract for which the entity will receive future legal services – which are therefore not in the scope of IAS 37. More clarity is needed on the intended application of the amendments including, for example, whether a distinction should be made between internal/external costs. [UKEB FCL paragraph A50]

IASB staff summary – Exposure Draft feedback

IASB staff Agenda Paper 22D Costs Suggestions and request for guidance (paragraphs 17 and 21-23) Some respondents suggest refinements to the proposal. For example: ... allowing an entity to measure a provision at either its 'fulfilment value' or 'transfer value' to maintain alignment with the existing requirements in paragraph 37 of IAS 37. .... clarifying whether, in applying the existing paragraph 68 of IAS 37, an entity would measure a provision at the lower of (i) the cost of settling the obligation (for example, by continuing to fulfil an onerous contract) or (ii) the cost of avoiding settling the obligation (for example, by cancelling an onerous contract and paying any cancellation fee). .... fully aligning the working in the proposed paragraph 40A of the Exposure Draft with that in the existing paragraph 68A of IAS 37. Paragraph 68A includes examples ..... ... incorporating into IAS 37 paragraph BC66 of the Basis for Conclusions, which explains the IASB's views underlying the proposal. Some respondents request additional guidance and illustrative examples to clarify which types of costs should be included in the measurement of provisions. Most of these respondents ask how an entity should include 'an allocation of other costs that relate directly' to settling an obligation. Some respondents ask for guidance on: whether to include the costs of an item of property, plant and equipment (PPE) used in settling an obligation (such as environmental rehabilitation) and, if so, whether those costs should comprise: the cash flows involved in purchasing the item of PPE; or the depreciation charge relating to using the item of PPE. whether to allocate the depreciation charge for an item of PPE if that item is also used for purposes beyond settling the obligation. A few respondents say entities currently do not perform such an allocation. whether to deduct cash recoveries (such as those earned from reprocessing and selling waste). whether to include all costs in real terms (adjusted for inflation) or nominal terms (not adjusted for inflation). Some respondents suggest refinements to the proposed requirements. For example: a preparer (in the oil and gas industry) requests 'practical expedients that could ease the burden of applying the proposed amendments'. a regulator group (in Europe) suggests requiring an entity to disclose 'material cost components included in estimating future expenditures'. The respondent says this information might be useful to users of financial statements. Feedback on the scope of the proposal (paragraphs 26-27) Some respondents ask the IASB to clarify the implications of the proposals for ancillary costs – especially the costs of legal services procured in settling litigation provisions: some question whether the requirement would apply to all provisions (as implied in the ED) or only to provisions that will be settled by transferring goods or services, rather than by paying cash, to the counterparty (as suggested in the staff webcast accompanying the ED). These respondents suggest clarifying the scope of the proposal. some respondents assume that the requirement would apply to all provisions and question its implications for ancillary costs. They ask whether an entity would be required to include ancillary costs in the measure of a provision and, if so, which ancillary costs – for example, should an entity include: fees paid to third parties (such as lawyer fees); and an allocation of internal costs (such as salaries paid to staff working in the entity's internal legal department)? In the case of a provision arising from litigation, a few respondents say they have observed diversity in whether external legal fees are included in the measure of a provision.

Secretariat's preliminary observations

C20The UKEB FCL highlighted the need for further application guidance and examples.

C21The IASB staff Agenda Paper 22D Costs, paragraphs 18-20, reflects areas of concern for IASB stakeholders. The paper also acknowledges that the IASB did not discuss the possible implications of the proposed requirement for obligations that an entity settles by paying cash to a counterparty (for example, litigation claims), but that might require the entity to procure goods or services (for example, legal services) on its own behalf in settling the obligation (ancillary costs).

C22The question as to how the requirements should apply to ancillary costs is not a subject that has been specifically discussed by the Board, and further work would be needed to be in a position to form a view. However, overall, the Secretariat agrees with stakeholders' requests for additional guidance and illustrative reflected in the table above. Further clarity in the proposals is needed to enhance consistent application.

Discount rates

Questions for the Board

5How do you think the IASB should move forward in the light of the feedback summarised in IASB staff Agenda Paper 22E Discount rates?

Feedback on discount rates

UKEB Final Comment Letter

We support the proposed amendment to require entities to discount the future expenditures expected to be required to settle an obligation at a rate (or rates) that reflect(s) the time value of money (represented by a risk-free rate) and “the risks surrounding the amount or timing of the expenditure to settle the obligation", which we understand would exclude non-performance risk. [UKEB FCL paragraph A51] ... we recommend the IASB considers clarifying that the proposed amendment is an exception to the measurement principle as envisaged in paragraph 6.92 of the Conceptual Framework. [UKEB FCL paragraph A53] We also support the proposed requirement to disclose the discount rate(s) used and the approach used to determine such rate(s). However, we believe the proposed disclosures could be further refined so they result in more useful information for users of accounts. [UKEB FCL paragraph A54] ... We recommend the IASB considers requiring: more granular disclosure in relation to the approach used to determine the discount rate – that is, disclosing not only the fact that the entity used a risk-free rate but also identifying the actual rate(s) used (e.g. UK gilt yields, swap rates or other); and disclosure of a sensitivity analysis that shows how the amount of a provision would have been affected by changes in the discount rate used, if the effect of discounting is significant. Disclosure of the methods and assumptions in preparing the sensitivity analysis should also be required. [UKEB FCL paragraph A55] ... We recommend the IASB considers making the disclosure requirements on measurement uncertainty more specific. [UKEB FCL paragraph A56] Consequential amendment to IFRS 3 Business Combinations We recommend the IASB considers whether an exception to the measurement principle in IFRS 3 is needed for provisions in scope of IAS 37. [UKEB FCL paragraph A68] 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), could result in a Day 2 change to the amount of the provision. The corresponding impact could be on profit or loss or, in the case of decommissioning, restoration and similar liabilities, could result in: an adjustment to the value of the related asset, or an adjustment to the revaluation surplus or deficit on the related asset. [UKEB FCL paragraph A69]

IASB staff summary – Exposure Draft feedback

IASB staff Agenda Paper 22E Discount rates Suggestions for alternatives to the proposed requirements (paragraph 27) the Canadian respondents and an accountancy body (in Europe) suggest that the desired improvements in comparability and transparency could be achieved by requiring entities to disclose more information about the discount rates they have used (as the IASB proposed), without having to require all entities to use risk-free rates. an accounting firm suggests requiring a rate similar to that required by paragraphs 83-86 of IAS 19 – namely, a rate determined by reference to the market yields on high quality corporate bond or, if no deep market exists for such bonds, the market yields on government bonds. The accounting firm expresses a view that the resulting advantages of greater consistency and comparability would outweigh the disadvantages of applying a rate that is not a precisely risk-free. It adds that entities could be required to disclose a sensitivity analysis to give users of the financial statements a full analysis of the effects of the rates used. Interaction between IAS 37 and IFRS 3 – day-two adjustments (paragraphs 30-31) Respondents say recognising a 'day 2' loss would not provide relevant information to users of financial statements and ask the IASB take action to prevent those losses: some respondents suggest providing an exception to the initial measurement principle in IFRS 3 - so that at the date of acquisition, a provision assumed in business combination would be measured applying the requirements of IAS 37, not at fair value. a few other respondents suggest the opposite – providing an exception to the subsequent measurement in principle in IFRS 3 so that after the date of acquisition, a provision assumed in a business combination would continue to be measured at fair value, not by applying the requirements of IAS 37. A few respondents say if the IASB accepts the 'day 2' adjustments as a consequence of the new requirements, it should acknowledge this fact in the Basis for Conclusions and provide guidance or an illustrative example [......]. Additional comments were provided in relation to: Real or nominal discount rate (paragraphs 32 – 35) Non-performance risk in cash flows (paragraph 36) Request for guidance on determining a risk-free discount rate (paragraph 37-38) For purposes of brevity, those have not been included in this paper. Information to disclose about the discount rate (paragraph 45) A few other respondents suggest further disclosure requirements. Suggestions include: more detailed information about the components of the discount rate used – namely the base rate and any adjustments made – in addition to the actual rate as proposed. an explanation of the assumptions used in determining the discount rate. narrative information about how a change in the discount rate between reporting dates has affected the measure of a provision. a sensitivity analysis explaining how the amount of a provision would be affected by changes in the discount rate used, if the effect of discounting is significant – one respondent suggests also highlighting both the best-case and worst-case scenarios.

Secretariat's preliminary observations

Suggestions for alternatives to the proposed requirements

C23Based on stakeholder feedback received by the IASB, two possible alternatives have been identified in relation to the proposed requirements:

1. to go ahead with the proposed clarification on discount rates (consistent with the UKEB FCL recommendation); or
2. to change the approach and not prescribe the discount rate, but achieve the desired improvements in comparability and transparency by improved disclosure requirements (a disclosure-only approach).

C24In the Secretariat's view, either of those alternatives could be worth exploring further. However, if a disclosure-only approach were to be followed, it would be even more important for the proposed disclosure requirements to be significantly enhanced as suggested in the UKEB FCL.

Interaction between IAS 37 and IFRS 3 – day-two adjustments

C25The Secretariat continues to be of the view that an exception to the measurement principle in IFRS 3 should be considered for provisions in scope of IAS 37. That is, stakeholder view a above.

C26However, view b has not been the subject of the Secretariat's discussions with UK stakeholders.

Information to disclose about the discount rate

C27In line with the views reflected by 'a few' respondents (presented above), the Secretariat continues to be of the view that the proposed disclosure requirements should be further enhanced, as noted in the UKEB FCL.

Other matters

Questions for the Board

6Do you have any other comments on how the IASB should move forward in the light of the feedback on the Exposure Draft?

Appendix D: Climate-Related and Other Uncertainties in the Financial Statements (CROUFS)

Project Stage

IASB	Research / Pipeline	Discussion paper	Redeliberation	Exposure Draft	Redeliberation	Final standard (n/a)	Post Implementation Review (n/a)
UKEB	Research / Influencing	Research / Influencing	Monitoring	Influencing	Monitoring	Endorsement (n/a)	Influencing (n/a)

UKEB project page

UKEB Final Comment Letter (published 3 December 2024)

Context

D1The Climate-Related and Other Uncertainties in the Financial Statements (CROUFS) Exposure Draft[^26] (ED) was published by the IASB in July 2024 and contained eight proposed illustrative examples, intended to accompany the relevant accounting standards.

D2The illustrative examples proposed how an entity could apply the requirements in IFRS Accounting Standards to report the effects of climate-related and other uncertainties in its financial statements.

D3The UKEB commented[^27] on the ED in the interest of ensuring connectivity and maintenance of high-quality financial reporting. However, the UKEB will not endorse or adopt these examples for use in the UK, as they will not form part of the mandatory sections of IFRS Accounting Standards.

D4At the May 2025 meeting the IASB considered preliminary staff recommendations which were noted in the UKEB May 2025 IASB General Update[^28]. A summary of the IASB meeting is provided in Annex A to this paper for information.

D5The purpose of this paper is to update Board members on the discussion at the ad-hoc Accounting Standards Advisory Forum (ASAF) meeting on the CROUFS project which took place on 28 May 2025.

May 2025 ASAF CROUFS discussion

Connectivity

D6The IASB staff provided a summary of their preliminary recommendations and sought ASAF members' views on several issues, which are outlined in the following sections.

D7The majority of ASAF members were supportive of the preliminary recommendation to include a question in the forthcoming Request for Information for the IASB's Fourth Agenda Consultation about the prioritisation of activities to facilitate connectivity in reporting.

Providing illustrative examples

D8The majority of ASAF members also agreed with the IASB publishing illustrative examples. However, there were continuing concerns expressed about the need for standard setting, and whether the publication of examples would achieve the IASB's project objectives and the potential unintended consequences of causing significant changes in current practice. Two ASAF members suggested the IASB consider suspending the project.

D9Several ASAF members suggested that the IASB needed to manage stakeholder expectations when the examples were published. This could include clear communication regarding their non mandatory status and that they did not alter the requirements of any IFRS Accounting Standards.

Approach to developing the examples

D10Many ASAF members were concerned about the proposed withdrawal of Example 5 as this was the only example relating to ‘other uncertainties' as opposed to climate.

D11There were mixed views about whether the project objective or title should be changed if the example was removed. Many ASAF members were sceptical as to whether general statements in the other examples about applicability to other uncertainties would be sufficient.

Proposed changes to Illustrative Examples

D12Most ASAF members were supportive of the proposed amendments to the examples. Two ASAF members noted the potential inconsistency of terminology with IFRS 18 in Example 8.

D13Some ASAF members expressed concerns at the proposed drafting of references to IAS 1 paragraph 31, as it could be interpreted as being optional as opposed to being a requirement.

D14Drafting suggestions for improved clarity were made across the examples.

Transition and effective date

D15ASAF members expressed mixed views in relation to whether transition requirements or an effective date were required. However, a majority favoured no effective date being applied.

D16The IASB Chair noted that he favoured making a draft available earlier than October 2025 to assist December 2025 year end reporting entities, as opposed to delaying publication.

Next steps

D17The IASB staff will ask the IASB to decide on the project direction at its June 2025 meeting.

D18Subject to the IASB June discussion, it is anticipated that the IASB will publish the examples in October 2025, with a draft being made available on the IFRS Foundation website in September 2025.

D19The UKEB Secretariat will continue to monitor the IASB's redeliberations and will provide a further update at a future UKEB meeting.

Annex A: Summary of May 2025 IASB meeting on CROUFS

1Due to the timing of the publication of the UKEB May board papers a verbal update was provided at that meeting on the IASB May 2025 meeting on the project. The IASB staff presented their preliminary recommendations and analysis of the stakeholder feedback on the CROUFS ED. IASB members were not asked to make any decisions[^29].

2A summary from the IASB discussion is provided below for information.

Connectivity

3IASB members supported the recommendation to seek feedback in the Fourth Agenda Consultation on the priority of additional work to facilitate connected financial reporting, including additional educational materials.

Providing Illustrative Examples

4There was widespread support for the recommendation to publish the CROUFS examples as a single package and, in addition to also include them in the relevant IFRS Accounting Standards as accompanying material.

5IASB members did not support drafting any additional examples.

Approach to developing the examples

6Most IASB members supported the proposed changes to Examples 1 and 2 including making references to Practice Statement 2 Making Materiality Judgements.

7Some IASB members suggested augmenting the examples by referring to IAS 1 paragraph 17(c), which was supported by the IASB Chair, and was in line with the UKEB's Final Comment Letter recommendations.

8Regarding the staff recommendation to withdraw Example 5 (related to other regulatory uncertainty) due to stakeholder feedback that the fact pattern was unrealistic, views were mixed. It was noted that all of the examples would be climate-related if this example was withdrawn.

9Most IASB members wanted to retain the scope of the project as referring to other uncertainties but make it clear in the Basis for Conclusions and the examples themselves that although the examples are climate-related, they could be equally applied to other uncertainties.

Proposed changes to examples

10Most IASB members supported the proposed, more minor changes, to the remaining examples. The proposed changes are summarised in Annex B of the May 2025 UKEB IASB General Update paper[^30].

11Example 8 (disaggregation), the proposed drafting introduced a concept of 'significance/strategic importance' and did not refer to the concept of 'shared characteristics' used in IFRS 18 Presentation and Disclosure in Financial Statements paragraph 41. An IASB member raised concerns about consistency as the example would be published ahead of IFRS 18's effective date of 1 January 2027. The member noted potential unintended consequences in how the disaggregation principles may be applied in practice.

Transition

12Views were mixed as to whether, given expected changes in practice from issuing the examples, an effective date and/or transition requirements were needed.

13Several IASB members, including the IASB Vice-Chair suggested that an effective date may be needed if the examples are published in October 2025, given the proximity to December 2025 year end reporting, and that there might be potential tension with auditor and regulator expectations.

14Other IASB members, including the IASB Chair, considered that as the examples were illustrations of existing requirements neither an effective date nor any transition requirements were necessary.

15The IASB staff proposed to include in the Basis for Conclusions reference to the concept of 'sufficient time' for preparers to apply the examples. The IFRS Interpretations Committee Chair raised concerns as the IFRS Foundation Due Process Handbook applies this term specifically to IFRIC Agenda Decisions i.e. and not to other explanatory materials.

The IASB Chair suggested that an early draft could be published in September, in advance of final publication in October. Another option discussed was for the IASB to potentially delay publication of the examples until December 2025.

---

Appendix E: Interpretations Committee Update

UKEB Project Status:	Monitoring
IASB Next Milestone:	N/A

Background

E1The 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 Interpretations Committee's analysis; or
3. usefulness of the explanations and clarifications included in the tentative agenda decision.

E2The Interpretations Committee met on 11 March 2025. The next Interpretations Committee meeting is on 25 to 26 June 2025.

Agenda decisions referencing IAS 1

E3The Interpretations Committee identified 41 agenda decisions ¹ that include references to IAS 1 Presentation of Financial Statements and has been discussing how to update those references once IFRS 18 Presentation and Disclosure in Financial Statements becomes effective (that is, from 1 January 2027) and IAS 1 is withdrawn.

E4The Interpretations Committee decided the approach to update 31 of those agenda decisions at its November 2024 meeting (reported to the UKEB at its November 2024 meeting), and at the IASB's April 2025 meeting (and reported to the UKEB at its May 2025 meeting ²).

E5The approach to update the remaining ten agenda decisions is the subject of the June 2025 Interpretations Committee's discussions. These agenda decisions focus on fact patterns that relate to other IFRS Accounting Standards and include references to IAS 1 that have not been brought forward unchanged. ³

A recap on the approach taken for 31 agenda decisions

E6The following table summarises the approach taken for 31 agenda decisions:

Approach taken	Number of agenda decisions
>
> The IASB Chair suggested that an early draft could be published in September, in advance of final publication in October. Another option discussed was for the IASB to potentially delay publication of the examples until December 2025.

---

Appendix E: Interpretations Committee Update

UKEB Project Status:	Monitoring
IASB Next Milestone:	N/A

Background

E1The 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 Interpretations Committee's analysis; or
3. usefulness of the explanations and clarifications included in the tentative agenda decision.

E2The Interpretations Committee met on 11 March 2025. The next Interpretations Committee meeting is on 25 to 26 June 2025.

Agenda decisions referencing IAS 1

E3The Interpretations Committee identified 41 agenda decisions ¹ that include references to IAS 1 Presentation of Financial Statements and has been discussing how to update those references once IFRS 18 Presentation and Disclosure in Financial Statements becomes effective (that is, from 1 January 2027) and IAS 1 is withdrawn.

E4The Interpretations Committee decided the approach to update 31 of those agenda decisions at its November 2024 meeting (reported to the UKEB at its November 2024 meeting), and at the IASB's April 2025 meeting (and reported to the UKEB at its May 2025 meeting ²).

E5The approach to update the remaining ten agenda decisions is the subject of the June 2025 Interpretations Committee's discussions. These agenda decisions focus on fact patterns that relate to other IFRS Accounting Standards and include references to IAS 1 that have not been brought forward unchanged. ³

A recap on the approach taken for 31 agenda decisions

E6The following table summarises the approach taken for 31 agenda decisions:

Approach taken	Number of agenda decisions
>
> IASB and IFRS Interpretations Committee—June 2025
>
> 14The IASB staff proposed to include in the Basis for Conclusions reference to the concept of 'sufficient time' for preparers to apply the examples. The IFRS Interpretations Committee Chair raised concerns as the IFRS Foundation Due Process Handbook applies this term specifically to IFRIC Agenda Decisions i.e. and not to other explanatory materials.
>
> The IASB Chair suggested that an early draft could be published in September, in advance of final publication in October. Another option discussed was for the IASB to potentially delay publication of the examples until December 2025.

Appendix E: Interpretations Committee Update

UKEB Project Status:	Monitoring
IASB Next Milestone:	N/A

Background

E1The 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 Interpretations Committee's analysis; or
3. usefulness of the explanations and clarifications included in the tentative agenda decision.

E2The Interpretations Committee met on 11 March 2025. The next Interpretations Committee meeting is on 25 to 26 June 2025.

Agenda decisions referencing IAS 1

E3The Interpretations Committee identified 41 agenda decisions ¹ that include references to IAS 1 Presentation of Financial Statements and has been discussing how to update those references once IFRS 18 Presentation and Disclosure in Financial Statements becomes effective (that is, from 1 January 2027) and IAS 1 is withdrawn.

E4The Interpretations Committee decided the approach to update 31 of those agenda decisions at its November 2024 meeting (reported to the UKEB at its November 2024 meeting), and at the IASB's April 2025 meeting (and reported to the UKEB at its May 2025 meeting ²).

E5The approach to update the remaining ten agenda decisions is the subject of the June 2025 Interpretations Committee's discussions. These agenda decisions focus on fact patterns that relate to other IFRS Accounting Standards and include references to IAS 1 that have not been brought forward unchanged. ³

A recap on the approach taken for 31 agenda decisions

E6The following table summarises the approach taken for 31 agenda decisions:

Approach taken	Number of agenda decisions
IASB AND IFRS INTERPRETATIONS COMMITTEE—JUNE 2025

E7The June 2025 IASB staff paper does not indicate that the approach taken for the above agenda decisions will be subject to public consultation. The Secretariat will continue monitoring the Interpretations Committee's /IASB's activities in this respect.

Approach for the other ten agenda decisions

Nine agenda decisions

E8The IASB discussed at its April 2025 meeting the approach that would be taken for nine of those ten agenda decisions. These agenda decisions include explanatory material that, in addition to referring to other IFRS Accounting Standards, reference requirements in IAS 1 that have not been brought forward unchanged ⁷. At the May 2025 Board meeting, the Secretariat reported to the UKEB that the proposed updates to these agenda decisions do not raise significant issues requiring further consideration. ⁸ The UKEB agreed with the Secretariat's view. For convenience a list and description of these agenda decisions is reproduced in Annex A of this paper. Proposed updates to these agenda decisions have been brought for discussion to the June 2025 Committee meeting.

One agenda decision

E9At the June 2025 meeting, the Interpretations Committee will be discussing how the new requirements in IFRS 18 will apply to the agenda decision Supply Chain Financing Arrangements – Reverse Factoring. ⁹

E10The Secretariat has reviewed the IASB's staff proposed updates to this agenda decision (described in paragraphs 16-38 of IASB staff paper 5B), and this preliminary assessment has not raised concerns. A high-level summary of the explanatory material included in this agenda decision related to IAS 1 and the proposed updates in respect of the new requirements in IFRS 18 is included in Table 1 below.

Table 1: Supply Chain Financing Arrangements – Reverse Factoring

Issue	Summary based on IASB staff Agenda Paper 5B (June 2025)
## 15. The UKEB Secretariat’s assessment

Engagement with the IASB and Interpretations Committee

E7The June 2025 IASB staff paper does not indicate that the approach taken for the above agenda decisions will be subject to public consultation. The Secretariat will continue monitoring the Interpretations Committee's /IASB's activities in this respect.

Approach for the other ten agenda decisions

Nine agenda decisions

E8The IASB discussed at its April 2025 meeting the approach that would be taken for nine of those ten agenda decisions. These agenda decisions include explanatory material that, in addition to referring to other IFRS Accounting Standards, reference requirements in IAS 1 that have not been brought forward unchanged ⁷. At the May 2025 Board meeting, the Secretariat reported to the UKEB that the proposed updates to these agenda decisions do not raise significant issues requiring further consideration. ⁸ The UKEB agreed with the Secretariat's view. For convenience a list and description of these agenda decisions is reproduced in Annex A of this paper. Proposed updates to these agenda decisions have been brought for discussion to the June 2025 Committee meeting.

One agenda decision

E9At the June 2025 meeting, the Interpretations Committee will be discussing how the new requirements in IFRS 18 will apply to the agenda decision Supply Chain Financing Arrangements – Reverse Factoring. ⁹

E10The Secretariat has reviewed the IASB's staff proposed updates to this agenda decision (described in paragraphs 16-38 of IASB staff paper 5B), and this preliminary assessment has not raised concerns. A high-level summary of the explanatory material included in this agenda decision related to IAS 1 and the proposed updates in respect of the new requirements in IFRS 18 is included in Table 1 below.

Table 1: Supply Chain Financing Arrangements – Reverse Factoring

Issue	Summary based on IASB staff Agenda Paper 5B (June 2025)

Approach taken	Number of agenda decisions	Explanations
To withdraw	2	The agenda decisions: Presentation requirements (May 2014) and Presentation of Liabilities or Assets Related to Uncertain Tax Treatments (September 2019) focus on questions about the requirements in IAS 1 for which the IASB developed new requirements in IFRS 18. These agenda decisions will, therefore, be withdrawn once IFRS 18 becomes effective.
		The agenda decision on Presentation of Liabilities or Assets Related to Uncertain Tax Treatments was brought to the Board's attention at its May 2025 meeting, given that the initial IASB staff recommendation was to update it rather than withdraw it. 4 The Secretariat has encouraged the IASB staff to ensure that stakeholders can provide feedback on the decision to withdraw this agenda decision to avoid unintended consequences. 5
To update	3	These agenda decisions focus on questions about the requirements in IAS 1 that have been brought forward unchanged to IFRS 18 or other IFRS Accounting Standards. When IFRS 18 becomes effective, the IASB staff will update the references included in the explanatory material of these agenda decisions with new references.
To update	26 6	These agenda decisions include explanatory material that, in addition to referring to other IFRS Accounting Standards, reference requirements in IAS 1 that have been brought forward unchanged to IFRS 18 or other IFRS Accounting Standards.
		When IFRS 18 becomes effective, the IASB staff will update the references included in the explanatory material of these agenda decisions with references to IFRS 18 or other IFRS Accounting Standards.
Total	31

E7The June 2025 IASB staff paper does not indicate that the approach taken for the above agenda decisions will be subject to public consultation. The Secretariat will continue monitoring the Interpretations Committee's /IASB's activities in this respect.

Approach for the other ten agenda decisions

Nine agenda decisions

E8The IASB discussed at its April 2025 meeting the approach that would be taken for nine of those ten agenda decisions. These agenda decisions include explanatory material that, in addition to referring to other IFRS Accounting Standards, reference requirements in IAS 1 that have not been brought forward unchanged ⁷. At the May 2025 Board meeting, the Secretariat reported to the UKEB that the proposed updates to these agenda decisions do not raise significant issues requiring further consideration. ⁸ The UKEB agreed with the Secretariat's view. For convenience a list and description of these agenda decisions is reproduced in Annex A of this paper. Proposed updates to these agenda decisions have been brought for discussion to the June 2025 Committee meeting.

One agenda decision

E9At the June 2025 meeting, the Interpretations Committee will be discussing how the new requirements in IFRS 18 will apply to the agenda decision Supply Chain Financing Arrangements – Reverse Factoring. ⁹

E10The Secretariat has reviewed the IASB's staff proposed updates to this agenda decision (described in paragraphs 16-38 of IASB staff paper 5B), and this preliminary assessment has not raised concerns. A high-level summary of the explanatory material included in this agenda decision related to IAS 1 and the proposed updates in respect of the new requirements in IFRS 18 is included in Table 1 below.

Table 1: Supply Chain Financing Arrangements – Reverse Factoring

Issue	Summary based on IASB staff Agenda Paper 5B (June 2025)

| Summary based on IASB staff Agenda Paper 5B (June 2025) |

Appendix F: List of active IASB projects

This Appendix provides a list of all active IASB projects¹, including links to the IASB project page and, and, where relevant, to the UKEB project page and any UKEB reports or comment letters. Items highlighted in grey are changed from the last report.

| List of IASB projects |