8 IASB General Update

30 October 2025 Agenda Paper 8

Executive Summary

Purpose of the paper

This paper provides the Board with an update on projects the Secretariat is currently monitoring, including the work if 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 progress and decisions being made by the IASB on active projects. Discussions 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 September 2025 meeting.

Topics for discussion

• Financial Instruments with Characteristics of Equity
• Interpretations Committee Update

Topics for noting

• Amortised Cost Measurement
• Provisions – Targeted Improvements
• Business Combinations – Disclosures, Goodwill and Impairment
• Statement of Cash Flows and Related Matters
• Fourth Agenda Consultation
• IASB Workplan

The October 2025 IASB meeting coincides with the UKEB meeting. The agenda papers published on the IASB website include papers¹ relating to Rate-regulated Activities. These papers consider sweep issues that include some of the concerns raised by UK stakeholders. A written update will be provided to the November 2025 UKEB meeting.

Decisions for the Board

Topics for discussion

Financial Instruments with Characteristics of Equity

1Do Board Members have any comments on the IASB's tentative decisions on reclassification and shareholder discretion?

Interpretations Committee Update

1Do Board Members agree that the UKEB will not undertake substantive work at this time on the following pipeline issues:

1. Assessment of 'specified main business activity' in separate financial statements of a parent entity (IFRS 18);
2. Classification in profit or loss of gains and losses on derivatives economically hedging a net exposure (IFRS 18);
3. Fair presentation and compliance with IFRS Accounting Standards (IAS 1); and
4. Scope of the requirements in paragraph 83 of IFRS 18?

2Do Board Members agree the Secretariat should develop a potential response to the Interpretations Committee, to be presented for Board consideration at its November 2025 meeting, on the following issue:

1. Classification of a Foreign Exchange Difference from an Intragroup Monetary Liability (or Asset) (IFRS 18)?

Note: The Board is not asked to make a decision on whether to respond to the Tentative Agenda Decision at this meeting. The Board will have an opportunity to further discuss this matter at its November 2025 meeting.

Topics for noting

Do Board Members have any comments or questions on the topics for noting?

Recommendation

N/A

Appendices

Appendix A: Financial Instruments with Characteristics of Equity Appendix B: Interpretations Committee Update Appendix C: Amortised Cost Measurement Appendix D: Provisions – Targeted Improvements Appendix E: Business Combinations – Disclosures, Goodwill and Impairment Appendix F: Statement of Cash Flows and Related Matters Appendix G: Fourth Agenda Consultation Appendix H: IASB Workplan Appendix I: List of IASB projects

Appendix A: Financial Instruments with Characteristics of Equity

IASB Next Milestone: Final Amendments

• UKEB project page
• UKEB Final Comment Letter (published 3 April 2024)

Purpose of this paper

A1The purpose of this paper is to provide the Board with an update on the IASB's redeliberation of certain proposals in the Exposure Draft Financial Instruments with Characteristics of Equity (ED). At its September 2025 meeting, the IASB discussed and voted on possible refinements to the reclassification and shareholder discretion proposals in the ED, to take account of stakeholder feedback.

Background

A2In November 2023, the IASB issued the ED which seeks to clarify the classification requirements and principles of IAS 32 Financial Instruments: Presentation. The ED also included presentation and disclosure proposals in response to calls from users for "better information about the characteristics of financial liabilities and equity instruments that are not captured by classification alone, and about the amounts attributable to ordinary shareholders of an entity”². The UKEB issued its Final Comment Letter (FCL) in response to the ED in April 2024.

IASB September 2025 Discussion

Reclassification of financial liabilities and equity instruments

A3The ED proposed clarification of the circumstances in which reclassification of financial liabilities and equity instruments would be required. Most stakeholders, including the UKEB³, agreed with the proposed requirements to reclassify for changes in external circumstances⁴ but highlighted the need for additional clarifications and application guidance to support implementation⁵ and a common understanding of the term “external circumstances”.

A4However, many stakeholders (including the UKEB) suggested the IASB consider requiring reclassification for situations where a contractual term starts or stops being effective with the passage of time, thus changing the substance of the contractual arrangement. Stakeholders noted that prohibiting reclassification in such circumstances could be misleading and represent a change from what is currently being done in practice.

A5After initial discussion of feedback at the July 2025 IASB meeting, IASB staff brought a further paper⁶ to finalise the ED proposals, subject to certain refinements.

A6The paper:

1. Proposed certain clarifications to the description of circumstances external to the contract. This was not an area that the UKEB Final Comment Letter had significant concerns. The proposed clarifications appear relatively minor.
2. Set out some consideration of the interaction between reclassification and the derecognition requirements of IFRS 9 Financial Instruments. This addresses some of the concerns raised in the UKEB Comment Letter⁷ that a financial liability would continue to be recognised after the expiry of a contractual feature.
3. Proposed requiring reclassification for instruments which contain obligations to deliver an entity's own equity, where a change in substance could arise with the passage of time. An example of this could be a convertible instrument converting into a variable number of shares until a specified date, after which the number of shares becomes fixed.
4. Recommended that reclassification should only be possible from liabilities to equity, and not from equity to liabilities.

IASB discussion

A7A number of IASB members supported the proposals in the paper. However, one IASB member raised particular concern about circumstances where the expiry of a liability feature within a relatively short timeframe could give rise to a derecognition gain, while the equity element of the compound instrument would continue to be recognised, measured at nil. He said this would not be representationally faithful. He also expressed a view that the IASB had created this issue.

A8The IASB chair and two other Board members expressed reservations about taking a decision without further consideration.

A9During discussion, one Board member suggested that the reclassification proposals could be softened, by removing the word “only" from the proposed drafting. This would mean that instead of requiring reclassification "only” in defined circumstances, the final wording could spell out circumstances where reclassification was required and remain silent otherwise. This would potentially allow some judgement to remain over whether reclassification or derecognition might be appropriate in other circumstances.

A10IASB Board members also noted the importance of progress on the project. If stakeholders did not like the tentative decision, they would raise their concerns with the IASB.

A11Nine out of 12 Board members tentatively agreed with the staff proposals. The UKEB Secretariat understand that this includes the softening of the proposals discussed in the meeting, that are not reflected in the original paper.

A12Paragraph 32B of the ED said:

"An entity shall not reclassify a financial liability or an equity instrument after initial recognition unless paragraph 16E applies or the substance of the contractual arrangement changes because of a change in circumstances external to the contractual arrangement. If the substance of the contractual arrangement changes because of a change in circumstances external to the contractual arrangement, an entity shall reclassify any affected financial liability or equity instrument (see paragraphs 32C-32D).”

A13IASB staff suggested that a softening of staff proposals could refer to specifying circumstances in which an entity shall reclassify. However, subsequent to the meeting an IASB member said⁸ that this 'softening' relates only to proposals in the staff paper, and not to the wording in the ED or the Standard.

A14Paragraph A36 of the UKEB FCL highlighted two examples where the UKEB had concerns with the ED. One of those examples, in which an instrument to issue equity instruments meets the 'fixed for fixed' criteria at a point subsequent to issue, has been addressed by the proposal set out in paragraph A6(c) above.

A15The other example highlighted in paragraph A36 of the FCL related to an instrument with a contingent settlement feature which expired after initial recognition. IASB staff paper 5A⁹ sought to provide clarification on the interaction between reclassification and the derecognition requirements of IFRS 9, as set out in paragraph A6(b) above.

A16Proposed drafting changes to the ED proposals were not included in the meeting papers. In the light of the subsequent discussions to soften the staff proposals, the UKEB Secretariat does not have a clear understanding of whether the tentative decisions address UKEB concerns in this area or not.

A17The UKEB Secretariat intends to continue to engage with IASB staff to seek to understand how the tentative decisions will be reflected in the final amendments. The Secretariat also intends to discuss these tentative decisions at the next Financial Instruments Working Group meeting.

Shareholder discretion

A18The ED proposed clarifying that whether an entity has an unconditional right to avoid delivering cash or another financial asset depends on the facts and circumstances in which shareholder discretion arises. It proposed describing factors that should be considered in making the assessment of whether shareholder decisions are to be treated as entity decisions. The UKEB¹⁰ supported the proposals in the ED.

A19IASB staff presented a paper¹¹ summarising feedback on the ED proposals, and a paper¹² proposing some relatively minor refinements or clarifications to the ED proposals.

IASB discussion

A20All 12 IASB members tentatively voted in favour of proceeding with the ED proposals, subject to minor drafting improvements set out in IASB agenda paper 5C. They also tentatively agreed to clarify the principles underlying the proposed factors-based approach.

Next steps

A21The IASB will continue to redeliberate the classification topics in the Exposure Draft. The IASB workplan anticipates final amendments in the second half of 2026.

Question for the Board

1Do Board members have any comments on the IASB's tentative decisions on reclassification and shareholder discretion?

Annex 1: IASB's tentative decisions - September 2025

1) The reclassification of financial liabilities and equity instruments

Current requirements

IAS 32 is silent on the matter of reclassifications between financial liabilities and equity instruments, apart from in certain specified situations.

Exposure Draft proposals

The ED proposed providing greater clarity, by prohibiting reclassification between financial liabilities and equity, other than for certain changes arising outside the contract, e.g. a change in functional currency. The ED proposals prohibited reclassification as a result of changes due to the passage of time.

UKEB Comment Letter

The UKEB recommended the IASB consider requiring reclassification where contractual terms become, or stop being effective, with the passage of time. The UKEB also recommended additional guidance on the distinction between reclassification and derecognition.

IASB tentative decisions

The IASB tentatively decided:

1. to include clarifications to the description of circumstances external to the contract;
2. to require reclassification for instruments which contain obligations to deliver an entity's own equity, where a change in substance could arise when a contractual term stops being effective;
3. to permit reclassification only from financial liabilities to equity instruments, and not from equity to financial liabilities; and
4. to clarify the circumstances when reclassification requirements would apply.

2) Shareholder discretion

Current requirements

Equity classification within IAS 32 depends on whether an entity has an unconditional right to avoid delivering cash or another financial asset, or otherwise settle a financial instrument in such a way that it would be a financial liability.

Exposure Draft proposals

In some circumstances there is shareholder discretion in whether an entity has an unconditional right to avoid delivering cash or another financial asset. The ED proposed describing the factors an entity should consider in making the assessment of whether shareholder decisions are treated as entity decisions.

UKEB Comment Letter

The UKEB supported the IASB proposals, which would provide useful additional guardrails to help determine classification in a judgemental area.

IASB tentative decisions

The IASB tentatively decided to finalise the proposals subject to some minor drafting refinements, and additionally clarifying the principles underlying the proposed factors-based approach.

Appendix B: Interpretations Committee Update

Background

B1The 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 or IFRIC). 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.

B2The Interpretations Committee met on 16 September 2025.

B3The next Interpretations Committee meeting is on 25 to 26 November 2025.

Interpretations Committee agenda items

B4Below is an overview of the items that are part of IFRIC's agenda.¹³

B5The remainder of this update summarises the items considered as part of the Interpretations Committee's agenda. New material introduced in this update (as compared to the latest Interpretations Committee Update presented to the Board) is underlined. For full details please refer to the IFRS website.

B6The Board is asked to consider the following questions as it reviews the update summaries of the Committee's agenda items on the following pages.

Questions for the Board

1Do Board Members agree that the UKEB will not undertake substantive work at this time on the following pipeline issues:

1. Assessment of 'specified main business activity' in separate financial statements of a parent entity (IFRS 18);
2. Classification in profit or loss of gains and losses on derivatives economically hedging a net exposure (IFRS 18);
3. Fair presentation and compliance with IFRS Accounting Standards (IAS 1); and
4. Scope of the requirements in paragraph 83 of IFRS 18?

2Do Board Members agree the Secretariat should develop a potential response to the Interpretations Committee, to be presented for Board consideration at its November 2025 meeting, on the following issue:

1. Classification of a Foreign Exchange Difference from an Intragroup Monetary Liability (or Asset) (IFRS 18)? (see section ‘Tentative Agenda Decisions open for comment' in the paper)

Note: The Board is not asked to make a decision on whether to respond to the TAD at this meeting. The Board will have an opportunity to further discuss this matter at its November 2025 meeting.

Pipeline item (1/4)

Topic:

Assessment of 'specified main business activity' in separate financial statements of a parent entity (IFRS 18)

Standard:

IFRS 18 Presentation and Disclosure in Financial Statements

Question:

The submission raises a question about whether a parent entity (whose activities are limited to holding investments in group undertakings, either directly or via intermediate holding entities) that prepares separate financial statements (as either the ultimate holding entity in a group or an intermediate holding company within a larger group structure) qualifies as having a 'specified main business activity' of investing in assets (IFRS 18 paragraphs B30-B41).

The submission outlines three potential views.

1. View 1—The entity is a ‘pure' holding entity that engages solely in holding investments and the lack of any other substantive activity is sufficient evidence to classify investing in assets as its main business activity under IFRS 18. Paragraph B37, also acknowledges that the assessment of a main business activity can differ between a consolidated group and its individual subsidiaries.
2. View 2—The entity does not meet the criteria for having investing as a specified main business activity in paragraphs B34 to B36 of IFRS 18. Moreover, the examples with such an activity in paragraph B31 of IFRS 18 do not include holding companies. Therefore, the entity does not have a specified main business activity of investing in assets.
3. View 3—The entity should apply an accounting policy choice when deciding whether to adopt View 1 or View 2.

Comment:

This pipeline item was recently submitted to the Interpretations Committee and is currently at a preliminary research stage. We understand that the issue may be considered by the Committee at its November 2025 meeting (at the earliest). At present the UKEB Secretariat is conducting limited desktop research on the topic. Accordingly, at the October 2025 meeting it is recommended that the UKEB continues to monitor this issue but does not undertake further work at this time.¹⁴

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Footnotes

Pipeline item (2/4)

Pipeline item (3/4)

Pipeline item (4/4)

Tentative Agenda Decisions - open for comment (1/2)

Tentative Agenda Decisions - open for comment (2/2)

Tentative Agenda Decisions – comment period closed (1/3)

Tentative Agenda Decisions – comment period closed (2/3)

Tentative Agenda Decisions – comment period closed (3/3)

Appendix C: Amortised Cost Measurement

Project Stage

IASB Next Milestone: Exposure Draft H2 2026

Background

C1 At its September 2024 meeting, the IASB commenced a research project on the Amortised Cost Measurement requirements in IFRS 9 Financial Instruments.

C2 Information about the project was previously presented to the Board, including:

1. Project objectives and approach, as well as project criteria and scope. Refer to the UKEB March 2025 Agenda Paper 10 IASB General Update (Appendix B).
2. An indicative project timeline. Refer to the UKEB July 2025 Agenda Paper 9 IASB General Update (Appendix A).

C3 In June 2025, the IASB decided to move the Amortised Cost Measurement project from its research programme to its standard-setting programme.

IASB September 2025 meeting

C4 At its September 2025 meeting, the IASB commenced its deliberations of issues in scope of the project. The focus for the deliberations at this meeting was the existing requirements in IFRS 9 for determining the Effective Interest Rate (EIR), at initial recognition and for subsequent changes.

Determining an Effective Interest Rate at Initial Recognition

C5 The IASB discussed whether to clarify the requirements in IFRS 9 on determining the EIR if a financial instrument has conditions attached to the contractual interest rate²⁵. Specifically, it discussed:

1. which conditional terms an entity is required to consider in estimating the expected cash flows for the purpose of calculating the EIR; and
2. which estimation methods an entity is required to use in calculating the EIR.

C6 The IASB staff analysis presented at the meeting suggested that although there are differences in how entities apply the IFRS 9 requirements, standard-setting might not effectively resolve these differences. That is because:

1. the differences regarding whether and which conditional terms entities consider in the EIR calculation are not attributable to unclear requirements. IASB staff outreach findings indicate that entities not considering conditional terms in the EIR calculation often do so due to materiality assessments or insufficient information available for a reliable estimate; and
2. although IFRS 9 does not prescribe methods for considering conditional terms in the EIR calculation, IASB staff outreach findings indicate that entities use judgement to select appropriate methods based on relevant facts and circumstances, often applying other IFRS Accounting Standards by analogy. As a result, clarifications in this area may not lead to substantial improvements in financial reporting.

IASB tentative decision

C7 The IASB agreed with the staff recommendation and tentatively decided to take no further action on this matter.

Subsequent changes to the EIR

C8 The IASB discussed whether to clarify the requirements in paragraphs B5.4.5–B5.4.6²⁶ of IFRS 9²⁷. However, the IASB was not asked to make any decisions at the meeting.

C9 In the IASB staff's view, the IASB should consider clarifying the requirements related to accounting for subsequent changes to the EIR, as diversity in

application stems from unclear requirements or insufficient application guidance in IFRS 9.

C10 IASB staff outreach suggests that the diversity in application of the requirements in IFRS 9 generally stems from varied interpretations of what changes in interest rates are reflective of a movement in 'market rates of interest (IFRS 9 B5.4.5).

C11 To facilitate the IASB's discussion of potential clarifications, the IASB staff presented three potential alternatives for clarifying paragraph B5.4.5 of IFRS 9 (refer to Alternatives A–C below). These alternatives represented three distinct approaches, identified by the IASB staff based on current practices noted in their outreach with stakeholders and the IASB staff analysis of IFRS 9 requirements.

C12 The IASB staff noted that there may be other possible alternatives, combining elements of the alternatives presented at the meeting, that better balance costs and benefits. Those might be explored at a future meeting.

Potential alternatives

Alternative A

C13 Under Alternative A, paragraph B5.4.5 of IFRS 9 would apply solely to movements in contractual interest rates that are linked to general market-based variables, such as the benchmark interest component or inflation rate.

C14 Under this alternative, paragraph B5.4.5 would not apply to movements linked to borrower-specific factors, such as the credit spread.

Alternative B

C15 Under this alternative, paragraph B5.4.5 of IFRS 9 would apply to movements in contractual interest rates that are linked to any changes in market variables (both general market and borrower-specific rates). This means, the contractual interest rate as a whole might be reset or repriced to its prevailing market rate of interest.

C16 Alternative B would therefore mean an entity applies paragraph B5.4.5 to account for market resets or repricing of all components of an interest rate, i.e. both the general market-based elements (such as interest benchmark component) as well as the borrower specific elements (such as the credit spread).

Alternative C

C17 Under alternative C, paragraph B5.4.5 of IFRS 9 would apply to any changes in a contractual interest rate that result from contractually specified variables, regardless of the movements in market rates of interest.

C18 This alternative would therefore update the EIR even for changes that adjust the contractual interest rate independently of market rates prevailing at the time the contingent event occurs.

C19 The aim of this alternative would be to update the EIR to ensure it is consistent with the contractual interest payments or receipts, as and when they happen. To some extent, this alternative would result in an approach that is similar to cash accounting.

IASB deliberation

C20 The IASB discussed the different alternatives presented, including the main advantages and disadvantages for each of them. The Board did not express a clear preference for any of the different alternatives discussed. The IASB staff will continue to explore alternatives and will seek stakeholder feedback.

IASB's Financial Instruments Consultative Group²⁸

C21 The IFRS Foundation's Due Process²⁹ requires that once a major project is added to the IASB's standard-setting programme, the IASB considers whether a consultative group should be established for that project.

C22 The Amortised Cost Measurement is not considered a major project as it aims to make targeted improvements to IFRS 9 requirements rather than major amendments.

C23 Nonetheless, the IASB staff noted that the IASB is planning to establish a new consultative group for its financial instruments' projects. Once formed, the remit of the Financial Instruments Consultative Group³⁰ will include the Amortised Cost Measurement project.

Next steps

C24 The IASB plans to³¹:

1. Continue discussions about the requirements on ‘Subsequent changes to the EIR’ at a future meeting³².
2. Consider a preliminary analysis on remaining project topics, such as accounting for modification of financial instruments and the interaction between modification, derecognition and impairment requirements. The IASB staff plan to present this analysis in Q4 2025.
3. Discuss these topics with the IASB's consultative groups during Q4 2025. The IASB staff intends to ask the IASB to make decisions on these topics during Q1–Q2 2026.
4. Publish an Exposure Draft in H2 2026³³.

C25 The UKEB Secretariat will continue to monitor the IASB's deliberations and tentative decisions and will provide the Board with relevant updates in due course.

Appendix D: Provisions – Targeted Improvements

UKEB project page

UKEB Final Comment Letter (published 12 March 2025))

Background

D1 In November 2024, the IASB published its Exposure Draft (ED) Provisions - Targeted Improvements%20Provisions%20-%20Targeted%20Improvements) proposing amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which aimed to clarify:

1. when an entity recognises a provision (more specifically, the present obligation recognition criterion); and
2. two aspects of the requirements for measuring a provision:
   1. the costs an entity includes in measuring a provision; and
   2. the rate an entity uses to discount a provision to its present value.

D2 The UKEB submitted its Final Comment Letter in March 2025.

D3 In June 2025 the IASB discussed feedback received on its Exposure Draft, but it was not asked to make decisions at that meeting. The Board received an update at its June 2025 meeting³⁴.

IASB redeliberations – Discount rates

D4 At its September 2025 meeting, the IASB commenced the redeliberation of the proposals in its ED. The focus at the meeting was the proposed amendments on discount rates and related requirements (that is, related disclosures and interaction with IFRS 3 Business Combinations)³⁵.

D5 Feedback received by the IASB on its ED proposals in relation to discount rates, was broadly supportive. Most respondents agreed with the proposals, except for some stakeholders from one jurisdiction³⁶. The IASB acknowledged the concerns raised, but was overall supportive of the IASB staff recommendation and tentatively agreed to broadly retain the proposals in the ED.

D6 The interaction with IFRS 3 was not considered in the ED. Stakeholders, including the UKEB, noted a potential disconnect between the measurement requirements in the two standards. The UKEB recommended the IASB considered whether an exception to the measurement principle of fair value in IFRS 3 for provisions was needed. The IASB tentatively agreed to add such an exception to IFRS 3.

D7 A summary of the IASB's tentative decisions and background information (including the UKEB's recommendations to the IASB), is presented in Annex 1. Overall, the IASB's tentative decisions closely align with the UKEB recommendations in the UKEB Final Comment Letter.

Next steps

D8 In the light of significant concerns raised by some IASB stakeholders (including the UKEB) about the implications of the proposals for some levies, the IASB staff are now exploring ideas for possible application requirements for levies. The IASB staff will present their ideas for the IASB to discuss at a future meeting.

D9 In the meantime, the IASB will continue redeliberating the proposals in the ED. The IASB is expected to decide on the project direction in December 2025.

D10 The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will provide the Board with updates in due course.

Annex 1: IASB's tentative decisions – September 2025

Appendix E: Business Combinations—Disclosures, Goodwill and Impairment

UKEB project page

UKEB Final Comment Letter (published 19 July 2024))

Purpose of this paper

E1 The paper provides the Board with a further update on the IASB's redeliberation of the proposals in the Exposure Draft (ED) Business Combinations—Disclosures, Goodwill and Impairment (BCDGI)) at the September 2025 IASB meeting. A summary of the proposals in the ED, along with the tentative decisions made by the IASB to date during its redeliberation, can be found in Appendix A of the IASB Staff Paper Agenda 18 Cover paper for that meeting.

Background

E2 The IASB's objective for this project is to explore whether, by amending IFRS 3 Business Combinations; and IAS 36 Impairment of Assets³⁷, entities can, at a reasonable cost, provide users with more useful information about business combinations. The information should assist users to make better decisions, by helping them to 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.

IASB 24 September 2025 meeting

E3 The IASB continued its deliberations on the feedback received on the ED. This session discussed feedback received that was common to the proposals to require entities to disclose both performance information (acquisition-date key objectives and targets), and the proposals to disclose quantitative expected synergies. The IASB will consider the usefulness of each specific proposal at a later date.

E4 Feedback on these topics had previously been reported to the IASB at the December 2024 meeting³⁸. The IASB was not asked to make any decisions at the September 2025 meeting.

Performance and expected synergy information – common topics

Level playing field

E5 The IASB staff acknowledged preparers concerns that disclosure of information would place entities at a disadvantage to their competitors who use US GAAP (which currently does not require similar disclosure).

E6 The IASB staff analysis suggests that entities applying US GAAP disclose information similar to the proposed requirements, albeit outside the financial statements, more frequently than those applying IFRS. They therefore do not believe the proposals would place entities applying IFRS at a disadvantage.

E7 Whilst IASB members acknowledged and accepted the staff analysis relating to US GAAP, one IASB member raised concerns that the proposals could affect the competitiveness of entities applying IFRS Accounting Standards, quoting Japan, where companies have the option to use IFRS or Japanese GAAP.

Monetary costs

E8 The IASB staff also acknowledged other concerns raised during the consultation including those related to cost. The IASB staff will consider costs of implementing, and updating processes and controls, as part of their cost-benefit analysis on the proposals.

E9 The IASB staff noted that the proposals anticipated that much of the information disclosed would be based on internal management information, and therefore they believe the necessary information will be available.

E10 IASB members emphasised that the usefulness of information should be assessed holistically as part of a cost-benefit analysis. Costs should take account of not only the cost of new systems/processes, but also the cost to enforcers and auditors. The timing of the cost/benefit assessment was also considered important i.e. sooner rather than later.

Scope

E11 Some respondents to the ED suggested requiring performance and expected synergy information only for listed entities or entities with public accountability, because they think the cost that information would outweigh the benefits for smaller, private entities that apply IFRS Accounting Standards.

E12 The IASB staff believe the proposals to disclose performance and expected synergy information should not be limited to entities with public accountability or those which are listed for the reasons explained in their previous analysis³⁹.

E13 Specific requirements for those entities applying IFRS 19 Subsidiaries without Public Accountability: Disclosures are included in the ED and will be considered by the IASB at a future meeting.

E14 IASB members noted that, whilst reduced disclosures were proposed in the ED for subsidiaries without public accountability (under IFRS 19), consideration should also be given to extent reduced disclosures to other stand-alone entities without public accountability that are not within the scope of IFRS 19.

E15 IASB members acknowledged the high cost that may be involved for such entities to incorporate the proposed disclosure requirements and requested a robust cost/benefit analysis of this be undertaken. Members noted that such a cost/benefit analysis would be different from, and separate to, the cost/benefit analysis for those entities in scope of IFRS 19.

Subsequent changes to acquisition date key objectives/targets

E16 One IASB member suggested that the requirements for expected synergies not designated as acquisition date key objectives would not be expected to be subsequently reported upon. Further, any synergies quantified and reported in the financial statements following acquisition should be as calculated at the acquisition date and not at the reporting date.

E17 The proposals permit entities to cease disclosing performance against acquisition-date key metrics (including any synergies designated as key metrics) if those targets subsequently change. IASB members were reminded that users want information on changed metrics. Members debated whether this should be permitted, noting the following matters.

1. Other IASB members noted that the proposals did not prevent entities from continuing to disclose the information voluntarily in the financial statements or in management commentary, nor did it prevent investors from requesting the information.
2. Several IASB members highlighted that investors want acquisition-date information, such as objectives and expected synergies. However, for items which are not acquisition date key objectives there is no need to report subsequent to acquisition date. Members highlighted that acquisition date information helped users assess whether the price paid was reasonable and if management's expectations are subsequently realised⁴⁰. Following the discussion, the IASB suggested clarifying with investors that the proposed information would meet their needs. One example given was investors who needed to assess whether impairment of purchase price may be required and what subsequent information may be needed.

Next steps

E18 The IASB will continue redeliberating the proposals over the next few months. The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will provide the Board with updates in due course.

Appendix F: Statement of Cash Flows and Related Matters

IASB Next Milestone: Decide Project Direction

UKEB project page

Purpose of this paper

F1 This paper provides the Board with an update on the status of the Statement of Cash Flows and Related Matters project, following the IASB's meeting in September 2025. The IASB discussed how it could improve the disaggregation of cash flow information in the financial statements.

Background

F2 At its May 2025 meeting, the IASB decided that it would assess potential ways to improve:

1. The transparency of information communicated about cash flow measures not specified in IFRS Accounting Standards (discussed at the joint CMAC-GPF meeting in June 2025 and the July 2025 IASB meeting – the Board was updated in September 2025⁴¹).
2. The consistent application of requirements for classification of cash flows i.e. operating, investing or financing (discussed at the October 2025 ASAF meeting – the Board discussed the ASAF questions at the September 2025 UKEB meeting).
3. The disaggregation of cash flow information in the financial statements (discussed at the September 2025 IASB meeting – see update below).

F3 The IASB will first consider the approach to each of the areas, before exploring specific solutions.

IASB September 2025 meeting

Approach to disaggregation of cash flow information

F4 At the September 2025 IASB meeting, IASB members discussed how each of the investors' concerns, identified in their initial research, might be resolved, in relation to the requirements for disaggregating cash flow information in the financial statements⁴².

IASB tentative decisions

F5 The IASB tentatively decided to develop potential requirements to:

1. strengthen the link between:
   1. the statement of cash flows; and
   2. information presented or disclosed in other parts of the financial statements in accordance with IFRS Accounting Standards other than IAS 7 Statement of Cash Flows; and
2. improve the consistency of the presentation of cash flows from discontinued operations.

IASB staff views and IASB discussion

F6 At the March 2025 IASB meeting⁴³, the IASB staff reported the specific areas that investors said more information would be useful. The specific areas discussed at this meeting were composition of working capital, disaggregation of information about dividends received and paid, and cash flows from discontinued operations.

F7 The staff presented the results of initial research findings gathered from investor feedback and financial statement analysis of sampled entities⁴⁴, relating to those topics, as well as the topic of capital expenditures.

Components of changes in working capital

F8 A few IASB members highlighted that there are two distinct sub-topics to consider when looking at components of changes in working capital:

1. disaggregation, including the principles of disaggregation in IFRS 18⁴⁵ for all primary financial statements; and
2. the linkage between the statement of cash flows and information presented or disclosed elsewhere in the financial statements.

F9 During the discussion the following points were raised by IASB members:

1. Behavioural issues: Companies often rely on internal management cash flows rather than IAS 7 disclosures, raising questions about its relevance and usability; its late preparation and lack of footnotes make it harder for users to locate and understand information.
2. Cross-referencing: Members agreed that adding cross-references between the cash flow statement and other financial statements and notes, could be a simple way to improve disclosures. The issue is not necessarily missing data, but accessibility.
3. Disaggregation: Some members noted that effective linkage requires more than cross-referencing; meaningful disaggregation is key for effective linkage. Artificial disaggregation to enable linkages should be avoided; linkage must be meaningful and aligned with IFRS 18 principles.
4. Requiring minimum line items: Standardising disclosures could enhance comparability. One member suggested segment level detail for working capital.
5. Alignment with IFRS 18: There were mixed views on aligning IAS 7 classifications with IFRS 18. Ongoing confusion amongst some

F7The staff presented the results of initial research findings gathered from investor feedback and financial statement analysis of sampled entities⁴⁶, relating to those topics, as well as the topic of capital expenditures.

Components of changes in working capital

F8A few IASB members highlighted that there are two distinct sub-topics to consider when looking at components of changes in working capital:

1. disaggregation, including the principles of disaggregation in IFRS 18⁴⁷ for all primary financial statements; and
2. the linkage between the statement of cash flows and information presented or disclosed elsewhere in the financial statements.

F9During the discussion the following points were raised by IASB members:

1. Behavioural issues: Companies often rely on internal management cash flows rather than IAS 7 disclosures, raising questions about its relevance and usability; its late preparation and lack of footnotes make it harder for users to locate and understand information.
2. Cross-referencing: Members agreed that adding cross-references between the cash flow statement and other financial statements and notes, could be a simple way to improve disclosures. The issue is not necessarily missing data, but accessibility.
3. Disaggregation: Some members noted that effective linkage requires more than cross-referencing; meaningful disaggregation is key for effective linkage. Artificial disaggregation to enable linkages should be avoided; linkage must be meaningful and aligned with IFRS 18 principles.
4. Requiring minimum line items: Standardising disclosures could enhance comparability. One member suggested segment level detail for working capital.
5. Alignment with IFRS 18: There were mixed views on aligning IAS 7 classifications with IFRS 18. Ongoing confusion amongst some stakeholders about the non-alignment of categories (operating, investing, and financing) between IAS 7 and IFRS 18 was noted. One member suggested that users are not seeking alignment of the categories in the income statement and statement of cash flows. Some members suggested linking the statements through notes and cross-referencing. This is because it offers more flexibility and is easier to manage than enforcing consistent classification.
6. Linkage: Some members suggested that broader linkage issues may be better addressed under IFRS 18, while others stressed the need to focus specifically on the statement of cash flows.

F10Some members were concerned that there needs to be clear justification for adding to the IAS 7 requirements and suggested identifying the specific data needed and the benefits to users and ensuring that preparers can provide the information.

Disaggregation of information about dividends received

F11The IASB staff recommended adding a requirement for cross-referencing to the notes that disaggregate dividends received. The IASB staff did not recommend adding a specified line item in the statement of cash flows for dividends from associates and joint ventures or for dividends to NCI, because it would be unlikely to change preparer behaviour.

F12Contrary to the staff view, two IASB members considered that it would be useful to include a specified line item in the statement of cash flows for dividends from associates and joint ventures. This is because it would be a "quick win" from a cost-benefit perspective, as this information is already presented elsewhere in the financial statements.

Discontinued operations

F13IAS 7 does not contain any requirements relating to the presentation of cash flows from discontinued operations. Financial statement analysis revealed inconsistencies in whether line items reflect total cash flows, or only cash flows from continuing operations, with net cash flows from discontinued operations shown separately. The IASB staff recommended that the IASB develop requirements to improve the consistency of presenting cash flows from discontinued operations, which would improve accessibility and enhance comparability.

F14A few IASB members suggested engaging with users to identify the optimal approach for presenting discontinued operations in the statement of cash flows to enhance comparability.

Capital expenditures

F15Some investor feedback highlighted potential value in disaggregating capital expenditure into components of growth (increasing operating capacity) and maintenance (maintaining operating capacity), as encouraged in paragraph 50(c) of IAS 7. Financial statement analysis of non-financial institutions revealed that none of the entities sampled disclosed this split, although some preparers provided other disaggregated information (e.g. by asset type).

F16The staff expect IFRS 18's disaggregation requirements to improve the reporting of property, plant, and equipment (PPE), and research and development expenses (R&D), so no specific disaggregation requirements are proposed. R&D disclosures that investors seek fall outside the scope of this project and may be better addressed in the IASB intangible assets research.

F17The IASB did not discuss this issue.

Next Steps

F18Regarding disaggregation, the IASB plan to discuss at future meetings:

1. whether to retain encouragement in paragraphs 19 and 50 of IAS 7 for a particular presentation method or disclosures related to disaggregation of capital expenditures and cash flow information by reportable segment; and
2. any feedback specific to disaggregation of cash flow information from the June 2025 Request for Information on the post-implementation Review of IFRS 16 Leases.

F19The IASB will also continue to assess possible avenues to improve financial reporting in relation to each of the topics in the project plan.

F20The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will provide the Board with updates in due course.

Appendix G: IASB Fourth Agenda Consultation

Executive Summary

IASB project page: Fourth Agenda Consultation

IASB deliberations

G1At its September 2025 meeting the IASB agreed to defer the Fourth Agenda Consultation by a year. This will allow the IASB to conduct it concurrently with the ISSB's Second Agenda Consultation. The IASB considered that a key advantage of this approach was that both Boards would receive holistic feedback from Stakeholders.

G2The IASB Chair emphasised that the term 'concurrent' was intended to mean 'at the same time' rather than a ‘joint' approach. The format of the Request for Information will be decided by the two Boards in due course. The IASB has, for now, paused the project and moved it to the reserve project list⁴⁸.

G3The IASB decision extends the period covered by the Third Agenda Consultation into 2027. The IASB Chair noted that while this extension was permitted within the requirements of the Due Process, stakeholders should be aware that the situation was exceptional and did not reflect a policy change by the Board.

G4The IASB Chair recognised the need for stakeholders, particularly National Standard Setters, who may want to undertake research, to understand the projects the IASB may prioritise in the interim.

G5At the ASAF meeting in October 2025, the IASB Chair noted that, in addition to the two projects currently on the reserve list (Pollutant Pricing Mechanisms and Operating Segments), the Board had become aware that Hyperinflation and Crypto Currencies were also urgent and high priority topics for some stakeholders. ASAF members were advised that IASB intended to implement the newly developed project 'prioritisation framework⁴⁹' to inform a prioritisation discussion regarding relative project priorities at future IASB meeting.

G6The IASB's prioritisation framework is expected to be included as an agenda item at the December 2025 ASAF meeting.

Next Steps

G7The UKEB Secretariat will continue to monitor developments on the project and provide an update at a future Board meeting.

Appendix H: IASB Workplan

Purpose

H1This paper provides information to the Board on changes to the timing of projects on the IASB's workplan, discussed at the September 2025 IASB meeting, including:

1. Projects completed since the last update to the IASB workplan in June 2025.
2. Current projects for which expected progress have been amended.

Projects completed since June 2025

H2During the period since June 2025, the IASB completed the following projects:

1. Practice Statement 1: Management Commentary – revised and issued in June 2025.
2. Updating IFRS 19 Subsidiaries without Public Accountability: Disclosures – August 2025.

Current projects for which the expected timeline has been amended

H3The expected progress on the following projects has been amended:

1. Fourth Agenda Consultation: See Agenda Paper 8 Appendix G for details.
2. Rate-regulated Activities: The IASB is improving the clarity of the new requirements and therefore expects to issue the final Accounting Standard in Q2 2026. It was previously expected in December 2025.
3. Dynamic Risk Management: The IASB still expects to publish the Exposure Draft in Q4 2024 as originally expected, however, it is likely that it will be in December 2025 rather than October 2025.
4. Equity Method: To allow additional time for the IASB to consider significant concerns expressed by some stakeholders about some of the proposals, the decision on project direction is being deferred from Q4 2025 to at least Q1 2026.

Next steps

H4The UKEB Secretariat will continue to monitor updates to the IASB Workplan.

Appendix I: List of IASB projects

This Appendix provides a list of all active IASB projects⁵⁰, including links to the IASB project page 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.