Project Initiation Plan - IFRS Interpretations Committee – IFRS 18

Project overview

A1This project initiation plan relates to the UKEB's response¹ to the IFRS Interpretations Committee's (the Committee) invitation to comment on its Tentative Agenda Decision (TAD): Updates to Committee's agenda decisions for IFRS 18, following the issuance of IFRS 18 Presentation and Disclosure in Financial Statements. The TAD was published on 8 July 2025 with a response deadline of 6 October 2025.

A2The ten agenda decisions included in the TAD focus on fact patterns that relate to other IFRS Accounting Standards and include references to IAS 1 that have not been brought forward unchanged and are comprised of:

a)Nine agenda decisions that refer to the general requirements about presentation, materiality and aggregation of information in the financial statements. The Committee proposed replacing the references to IAS 1 with references to the new or amended requirements in IFRS 18. These agenda decisions are:

i.Disclosure of Revenues and Expenses for Reportable Segments (IFRS 8 Operating Segments) (July 2024)

ii.Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash Flows) (April 2022)

iii.Subsequent Expenditure on Biological Assets (IAS 41 Agriculture) (September 2019)

iv.Disclosure of Changes in Liabilities Arising from Financing Activities (IAS 7 Statement of Cash Flows) (September 2019)

v.Physical Settlement of Contracts to Buy or Sell a Non-financial Item (IFRS 9 Financial Instruments) (March 2019)

vi.Income and expenses arising on financial instruments with a negative yield–presentation in the statement of comprehensive income (IAS 39 Financial Instruments: Recognition and Measurement and IAS 1 Presentation of Financial Statements) (January 2015)

vii.Presentation of payments on non-income taxes (IAS 1 Presentation of Financial Statements and IAS 12 Income Taxes) (July 2012)

viii.Classification of tonnage taxes (IAS 12 Income Taxes) (May 2009)

ix.Normal operating cycle (IAS 1 Presentation of Financial Statements) (June 2005).

b)The agenda decision Supply Chain Financing Arrangements–Reverse Factoring (December 2020). The Committee proposed explaining how an entity applies the requirements in IFRS 18 to the fact pattern addressed by this agenda decision.

A3The UKEB only responds to a limited number of tentative agenda decisions in accordance with paragraph 5.29 of the Due Process Handbook (the Handbook). At its June 2025 meeting the Board resolved to submit a formal response to the Committee (whilst the UKEB is still assessing whether to adopt IFRS 18 for use in the UK) because of the:

a)Likely impact that IFRS 18 will have on a significant number of UK companies (if adopted in the UK).

b)Substantial volume of changes proposed as part of the TAD and their significance in the implementation phase of IFRS 18 for several companies.

c)Usefulness of the explanations and clarifications included in the TAD in the application of IFRS 18.

Milestones

A4Paragraph 3.7 of the Handbook notes that: “The activities undertaken to achieve the milestones for each project should be proportionate to the significance, urgency, complexity (i.e. nature or scope), size, expected timeline and expected interest or controversy attached to the project".

Draft Comment Letter

A5The Handbook² states that for an influencing project a Draft Comment Letter is generally mandatory, unless impracticable.

A6Paragraph 3.9 in the Handbook acknowledges that the UKEB may decide not to undertake a 'mandatory' milestone for a particular project. The Board should discuss the reasons for this decision at a public Board meeting. The Project Initiation Plan of the applicable project should clearly outline these reasons.

A7Following a review of the proposed timeline at its June 2025 meeting, the Board concluded that issuing a Draft Comment Letter in response to the TAD was not practicable due to the timing of the date of the TAD's publication for comment and the UKEB meeting timeline.

A8As no Draft Comment Letter (UKEB consultation document) was published for this project, and all stakeholder feedback received was considered and reflected accordingly in the Final Comment Letter, a Feedback Statement will not be prepared for this project.

Proportionate approach

A9Issuing a final comment letter without first consulting on a draft comment letter represents a proportionate approach given the nature of the proposed updates and the timeline for the TAD. More specifically:

a)The proposed updates to the agenda decisions included in the TAD do not introduce substantial or contentious issues nor change other aspects of these agenda decisions.

b)The very short timeline for the TAD (published after UKEB July 25 Board paper publication deadline, with final comments due on 6 October 2025 before the 30 October 2025 UKEB meeting) makes it impracticable for the Board to discuss a draft comment letter and receive feedback on this letter in time for the final submission deadline.

A10An ad-hoc advisory group is not considered necessary for this project.

Outreach

A11Paragraph 5.17 of the Handbook further states that, if issuing a draft comment letter even with a reduced comment period is not practicable (e.g. because the deadline to respond to the IASB makes it impracticable to receive and analyse responses), the UKEB still carries out outreach activities to obtain input from UK stakeholders.

A12Paragraph 5.32 of the Handbook also notes that in responding to a tentative agenda decision, some outreach activities are still undertaken, e.g. consultation with a representative group of stakeholders and/or with members of the UKEB's standing and/or ad-hoc advisory groups.

A13During June 2025³ the Secretariat has engaged with members of the UKEB's Accounting Firms and Institutes Advisory Group (AFIAG), Investor Advisory Group (IAG) and the Preparer Advisory Group (PAG). The UKEB received general support before the text of the TAD came out. After the TAD was published further input was received via email with some recommendations to enhance the clarity on the proposed updates). All input was considered and reflected accordingly in the draft Final Comment Letter discussed by the Board at its September 2025 meeting.

Final Comment Letter

A14A draft Final Comment Letter is presented for Board approval at its 25 September 2025 meeting.

Project Closure

A15In line with paragraphs 5.23-5.24 of the Handbook, the corresponding [draft] Due Process Compliance Statement (DPCS) summarising the due process activities undertaken is presented for Board approval at the September 2025 meeting along with the Final Comment Letter. A final version of the DPCS reflecting completion of the final stages of the project will be brought to the Board for noting at its October 2025 meeting.

Resources for the project

A16The Secretariat involved in this project consists of one Project Director, on a part-time basis, with oversight provided by one Senior Project Director. Sufficient resources are allowed for in the UKEB plan for 2025-26.