8 IASB General Update

Project Type: Endorsement and adoption Project Scope: Significant

Executive Summary

Topics for discussion

• IFRS Foundation Due Process Handbook
• Post-implementation Review of IFRS 16 Leases
• Equity Method

Topics for noting

• Post-implementation Review of IFRS 9—Hedge Accounting
• Financial Instruments with Characteristics of Equity
• List of IASB projects

Appendix A: IFRS Foundation Due Process Handbook

Purpose

A1The purpose of this paper is to seek Board Member views ahead of feedback to the IFRS Foundation Trustees' Exposure Draft (ED) Proposed Amendments to the IFRS Foundation's Due Process Handbook being discussed at the IASB's Accounting Standards Advisory Forum (ASAF) meeting, in March 2026.

A2The project update to be presented to ASAF summarises discussions of the Due Process Oversight Committee (DPOC) at its meeting on 3 March 2026, including:

a) stakeholder feedback to the ED consultation; and[^1]

b) further enhancements to the IFRS Foundation Due Process Handbook (the Handbook) made in response to the feedback.[^2]

Background

A3On 19 December 2024, the Trustees of the IFRS Foundation published the ED proposing amendments to the Handbook.

A4Primarily, amendments were proposed to reflect the creation of the International Sustainability Standards Board (ISSB) and ensure it formally applies the IFRS Foundation's due process to its operations. However, the proposed amendments also include enhancements and clarifications to the Handbook, based on the Foundation's recent experiences (for example, of post-implementation reviews).

UKEB Comment Letter

A5At its February 2025 meeting, the Board agreed to respond to the ED on the basis that the IFRS Foundation's due process has a direct impact on how the UKEB carries out its own statutory functions, including compliance with its own due process requirements.

A6Given the limited scope of the ED's proposals, the Board agreed to publish a high-level document on the UKEB website, setting out the key issues proposed for inclusion in the UKEB's Comment Letter, instead of a Draft Comment Letter. This document was also approved for circulation to the members of the UKEB advisory and working groups, via email, for their comments and views.

A7The UKEB's Final Comment Letter was submitted to the IFRS Foundation Trustees on 28 March 2025.

ASAF presentation from IFRS Foundation

A8The project update to be presented at ASAF provides the context for the Handbook's update, a summary of the consultation responses and proposals for further clarifications and enhancements to proposals in the ED.

A9The table below provides an overview of proposals in the ED, the recommendations in the UKEB Final Comment Letter and the main changes from the ED proposed.

A10In addition to the topics covered by the IFRS Foundation Trustees' consultation on the proposed amended Due Process Handbook, the UKEB proposed additional consideration be given to how the two boards analyse the likely costs and benefits of new requirements on affected parties, as well as the wider economic effects.

Next steps

A11The UKEB Secretariat will observe the March ASAF meeting and provide an update on the discussion to the Board in due course.

Clarifying and enhancing proposals in the Exposure Draft

1. Due process for the SASB Standards and the SASB Standards Taxonomy

2. Reflecting connectivity

3. Post-implementation reviews (PIR)

4. Interpretations Committee (IFRIC)

Areas where no substantive change is recommended

Including the due process for the ISSB in the Handbook

Conceptual Framework

IFRS Interpretations Committee

Minor improvements to IFRS Standards

Other materials to support application of IFRS Standards

Other targeted amendments

Appendix B: Post-implementation Review of IFRS 16 Leases

Purpose

B1The purpose of this paper is:

a) To ask for Board Members' views on the key messages the UKEB plans to raise at the March 2026 Accounting Standards Advisory Forum (ASAF) meeting. At that meeting the IASB will seek ASAF members' views on the IASB's discussions at its January, February and March 2026 meetings relating to the feedback received on the Post-implementation Review (PIR) of IFRS 16 Leases.

b) To provide the Board with an overview of:

i. the final batch of feedback the IASB received on its Request for Information: IFRS 16 Leases (RFI), following the IASB's February 2026 meeting; and

ii. the IASB staff's update to their review of academic literature related to IFRS 16.

Background

B2In June 2025, the IASB published its RFI, to seek stakeholders' views on the requirements in IFRS 16, with a comment period ending on 15 October 2025. The UKEB's final comment letter (FCL) to the IASB was submitted on 15 October 2025. The IASB received 122 responses to the RFI and held 35 outreach events.

B3IASB staff continued providing the IASB with their summary of feedback received on the RFI, with the final aspects brought to the IASB's meeting on 25 February 2026.

February 2026 IASB meeting

B4The IASB discussed the following papers at its February 2026 meeting:

a) Feedback summaries on the following aspects of the RFI:

i. Potential improvements to future transition requirements.[^1]

ii. Other matters.[^2]

b) Academic literature review - update.[^3]

B5The IASB did not make any tentative decisions.

B6Annex 1 provides:

a) a high-level overview of the feedback received by the IASB on its RFI and of the views expressed by the UKEB in its FCL; and

b) an overview of the academic literature review update provided by the IASB staff.

UKEB views

B7For those aspects on which the UKEB expressed views in its FCL, the UKEB's views generally align with the feedback the IASB discussed during its February 2026 meeting.

March 2026 ASAF meeting

IASB staff's objective

B8The IASB plan to bring a project update and seek views from ASAF members on the IASB's discussions at its January, February and March 2026 meetings relating to the feedback received on the PIR of IFRS 16.

B9Staff papers[^4] for the March 2026 IASB meeting were only available from 16 March 2026. Therefore, the IASB ASAF paper provides only a summary of feedback and stakeholders' suggestions for reducing ongoing costs (Question 4 of RFI) and enhancing the usefulness of information resulting from lessees' application of judgement (Question 2 of RFI)[^5]. An overview of the ASAF paper is provided for the Board below:

a) On reducing ongoing costs, stakeholders recommended that the IASB consider:

i. Reducing the frequency with which lessees are required to remeasure lease liabilities.

ii. Allowing lessees to retain the existing discount rate when remeasuring lease liabilities for reassessments and lease modifications.

iii. Permitting the use of simplified discount rate approaches, such as a risk-free rate, a group or parent rate, or any readily obtainable borrowing rate.

iv. Expanding the scope of existing recognition exemptions.

v. Removing or streamlining selected disclosure requirements.

b) On the usefulness of information resulting from application of judgement, stakeholders generally supported the principles-based approach but identified areas where additional clarity could improve consistency and reduce diversity in practice. In particular, stakeholders suggested that the IASB:

i. Provide further guidance and illustrative examples on key judgements, including assessing the ‘reasonably certain' threshold for lease term and interpreting 'genuine variability' when identifying in-substance fixed payments.

ii. Clarify the requirements for determining the incremental borrowing rate and the treatment of variable lease payments.

iii. Introduce more specific disclosure requirements on significant judgements and assumptions - such as disclosures of weighted-average discount rates and methodologies applied - to enhance transparency and comparability.

iv. Consider simplifying or clarifying areas where judgement is currently viewed as unclear or overly complex.

UKEB Key messages

B10The Board was supportive of the Secretariat's proposed key messages relating to IASB discussions in January 2026 as set out in the Agenda Paper 9B of the UKEB's February 2026 meeting. These key messages included a comment that any proposed changes to simplify specific areas to mitigate ongoing costs for preparers should be carefully considered and weighed against the expected changes in benefits to users. Possible simplifications to consider include:

a) Streamlining discount rate requirements, for example by permitting use of a lessee's obtainable borrowing rate instead of the incremental borrowing rate.

b) Revising the low-value and short-term exemptions to reduce their perceived rule-based nature and enable a more principles-based, materiality-driven approach.

B11In addition to the key messages proposed in the January 2026 UKEB meeting, the Secretariat's preliminary view about key messages to convey at the ASAF meeting on the matters discussed at the IASB's February 2026 meeting is:

a) The IASB's feedback aligns with the UKEB's view that the transition requirements generally worked well, preparers valued the simplifying practical expedient, though the lack of full retrospective application may have led some users to continue adjusting back to IAS 17 figures.

b) The UKEB has not been made aware of pervasive concerns in the UK relating to applying IFRS 16 with IFRS 9 for rent concessions.

c) Stakeholder feedback to the IASB broadly agreed with the UKEB's earlier views on IFRS 15. However, many still find aspects of IFRS 16 unclear, especially when deciding whether a sale has occurred in sale and leaseback transactions. They also point to challenges around renewal options and situations where only part of an asset is leased back. In response, targeted clarifications to IFRS 16, potentially drawing on IFRS 15 guidance, could help improve consistency.

d) The UKEB has not been made aware of any specific issues in the UK around applying the partial gain or loss recognition requirements.

e) The UKEB has not identified any other significant matters relevant to the assessment of the effects of IFRS 16.

Next steps

B12At future meetings, the IASB will discuss its actions in response to the feedback received. More specifically, at its March 2026 meeting, the IASB will discuss staff analysis and recommendations on whether to take any actions in response to stakeholders' feedback about:

a) ongoing costs for lessees of applying the measurement requirements in IFRS 16; and

b) usefulness of information resulting from lessees' application of judgement.

B13The Secretariat will provide a verbal update to the Board at its March 2026 meeting of the IASB's March 2026 meeting to assist the Board in finalising the key messages to convey at the upcoming ASAF meeting.

B14The IASB expects to publish a project report and feedback statement before the end of 2026.

B15The Secretariat will continue to monitor the IASB discussions and update the Board as necessary.

Annex 1: Overview of feedback received by IASB against UKEB views in FCL and academic literature review update

Stakeholder feedback to IASB and UKEB FCL

1The table below provides an overview of the feedback received by the IASB against the views provided by the UKEB in its FCL.

Academic literature review update

2At its March 2025 meeting the IASB discussed an overview of the academic literature relevant to the PIR of IFRS 16. During its February 2026 meeting, the IASB staff presented a summary of the additional academic literature relevant to the PIR of IFRS 16, identified since the initial review.

3The feedback included the following:

a) Recent academic evidence indicates that IFRS 16 has had significant effects on entities' financial statements and key ratios, with impacts differing by sector. Studies also observed continued diversity in how entities present and explain lease-related impacts in practice.

b) Research from one jurisdiction suggested that early compliance with IFRS 16 disclosure requirements was moderate and higher among entities audited by Big Four firms.

c) Several studies found that IFRS 16 improved the usefulness of lease information for users, including evidence of enhanced investment and financing decisions and reduced share-price-crash risk for lease-intensive entities.

d) Findings on comparability were mixed: some studies reported improved transparency and comparability, while others found that differences between IFRS 16 and Topic 842 can influence user judgements and increase information-processing costs.

e) Evidence on real effects showed operational impacts—such as system changes and implementation costs—alongside improvements in internal controls and decision-making. Some studies also indicated increases in leasing activity, reduced capital expenditure and debt financing, and improved investment efficiency following implementation.

Appendix C: Equity Method

Purpose

C1The purpose of this paper is:

a) To provide an update on the IASB's deliberation at its February 2026 meeting on the proposal in the Exposure Draft (ED) Equity Method of Accounting IAS 28 Investments in Associates and Joint Ventures (revised 202x) relating to impairment of an investment.

b) To ask for Board Members' views on the key messages the UKEB plans to raise at the March 2026 Accounting Standards Advisory Forum (ASAF) meeting, on the proposal in the ED relating to recognition of full gains and losses on transactions with associates and joint ventures (JVs).

Background

C2In September 2024, the IASB published its ED, which aimed to:

a) clarify and add to the requirements in IAS 28 to answer application questions about how to apply the equity method of accounting;

b) reorder the requirements in a more logical and consistent way to help companies with the application of the Standard i.e. improve the understandability; and

c) improve the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements to complement the proposed amendments to IAS 28.

C3The UKEB undertook a ‘light touch' approach in responding to the ED and is not aware of pervasive or material concerns for the UK arising from the proposals. Therefore, the UKEB supported the proposals in the ED, but did not comment on each specific proposal.

C4In May 2025, the IASB discussed feedback it received on the ED. The Board received an update at its September 2025 meeting[^6].

C5In September 2025, the IASB commenced its deliberations of the ED proposals. The Board has received regular updates, on IASB's decisions/tentative decisions[^7]. A summary of those decisions in the project plan and on redeliberating the proposals in the ED to date can be found in Appendix A of the March 2026 IASB Staff agenda paper 13.

C6According to the IASB's published workplan, the IASB is expected to decide on the project direction in March 2026.

IASB February 2026 meeting

Impairment of an investment

C7At its February 2026 meeting, the IASB continued its redeliberation of the proposals in the ED and discussed impairment of an investment. A summary of the ED proposal, other background information and tentative decisions on the topic discussed at the meeting are presented in Annex 1 of this paper.

Transaction with associates and JVs

C8At that meeting, the IASB continued to redeliberate the ED proposal that an investor recognises in full any gains or losses that result from transactions with its associates and JVs, due to concerns it received from some stakeholders in some jurisdictions.

C9At its October 2025 meeting, the IASB had decided to undertake further work:

a) to understand the concerns of respondents who said the proposals could increase opportunities for earnings management; and

b) to understand whether enhancing disclosures or adding guidance might resolve these concerns.

C10The IASB discussed feedback from further stakeholder meetings on the ED proposal[^8]. The overall messages from the stakeholder meetings were:

a) All groups of Japanese and Chinese meeting participants strongly disagree with the proposal. Investment in associates is pervasive in their jurisdictions and is an important feature of how entities conduct their business[^9]. Their main concerns are:

i. It will increase earnings management opportunities which will lead to significant distortions in profits and losses and result in a presentation that is less aligned with the business model of investors in associates and JVs.

ii. It is inconsistent with the fundamental principle that an investor recognises its share of the investee's financial performance based on its ownership interest.

iii. It is a fundamental change without undertaking a fundamental review of the equity method. The inconsistency between IAS 28 and IFRS 10 Consolidated Financial Statements does not justify the need for such a fundamental change because sales of businesses to an associate are relatively infrequent.

b) Whilst these transactions are captured by IAS 24 Related Party Disclosures, some regulators stressed the need for greater transparency, as preparers often disclose minimal information under the existing requirements. Regulators asked for enforceable specific disclosure requirements, such as the rationale for a transaction and how transactions are priced.

c) Discussion with some European preparers, about the concerns of Japanese and Chinese stakeholders, did not change those preparers' support for the ED proposal. The European preparers continue to support the ED proposal, citing the IASB's cost-benefit assessment of the proposals.

March 2026 ASAF meeting

Transactions with associates and joint ventures

C11The IASB will seek feedback on this specific topic at the forthcoming ASAF meeting at the end of March 2026.

C12In February 2026, the Secretariat provided the Board with an update on this topic (for noting)[^10]. That paper set out details of this ED proposal, the IASB's rationale, a summary of ED feedback received, and further outreach being undertaken by the IASB. As noted in that paper, the UKEB supported the proposals in the ED, but did not comment on the specific ED proposals in its comment letter.

C13To inform UKEB views to be shared at the forthcoming ASAF meeting, the Secretariat started to undertake outreach with UKEB Advisory Groups (AGs), specifically investors[^11], regarding the concerns expressed by some of the IASB's stakeholders in some jurisdictions and provided feedback in that paper.

C14The Secretariat has continued to seek feedback from other UKEB AGs[^12]. This paper provides the Board with an update on outreach with Accounting firms and Institutes and Preparers, and details the specific questions that the IASB staff will be asking at the forthcoming ASAF meeting, along with the Secretariat's suggested UKEB key messages.

IASB staff's objective

C15At the March 2026 ASAF meeting, the IASB will seek ASAF members' views on two aspects of the feedback received from its further work undertaken on the ED proposal:

a) the implications of the ED proposals for users of financial statements[^13]; and

b) the ability of an investor in an associate or JVs to obtain information from its associates/JVs for the application of the requirements in IAS 28 in preparing consolidated financial statements[^14].

C16In particular, ASAF members will be asked the following questions:

UKEB Advisory Groups feedback

UKEB Preparer Advisory Group (PAG)

C17PAG members supported the ED proposal to recognise gains and losses in full because:

a) it resolves the inconsistency between IAS 28 and IFRS 10 Consolidated Financial Statements; and

b) upfront full recognition of gains and losses is simpler, as it eliminates the need to track the unrecognised portion of gains and losses that is deferred under the current requirements in IAS 28.

C18When questioned whether, in response to feedback on the ED, additional disclosures on 'upstream' transactions or the rationale for transactions and their pricing, for either associates or JVs, could be a way forward to help users understand transactions, PAG members raised the following concerns:

a) Providing this information would be burdensome for preparers, particularly for those companies with a significant number of JVs and associates.

b) Challenges include completeness and timeliness of obtaining the necessary information from associates and JVs for any additional disclosures, given that a company does not have control over associates and JVs.

c) Detailed disclosures on transactions with associates and JVs are provided at the request of the regulator. However, the benefits of this information for users are questionable.

C19Other key points raised were:

a) Applying full recognition of gains and losses retrospectively would lead to some initial costs, but ongoing costs are not expected to increase.

b) Materiality would apply and therefore the impact of the ED proposal is not expected to be significant for most companies, as associates and JVs are not material.

UKEB Accounting Firms and Institutes Advisory Group (AFIAG)

C20Similar to PAG members, AFIAG members supported the ED proposal because it is simpler and less burdensome than the recognition currently required by IAS 28 to restrict gains and losses. Other key points raised by AFIAG members were:

a) Applying the current requirements in IAS 28 is challenging for companies in some circumstances.

b) Concerns raised by some respondents to the ED proposal on the potential for earnings management were acknowledged but not shared by AFIAG members.

c) AFIAG members noted that there are different views in practice on whether the equity method is a measurement method or a one-line consolidation.

d) AFIAG members observed that companies, in general, do not disclose information about restricted gains and losses as part of the IFRS 12 requirements for an entity to provide a reconciliation of the summarised information presented about a JV or associate to the carrying amount of that investment in the statement of financial position.

UKEB Key messages

C21The Secretariat's preliminary view about UKEB key messages to convey at the ASAF meeting is:

a) There are merits in the ED proposal i.e. simpler and less costly to apply for preparers. Users also noted that the current partial recognition requirements in IAS 28 add 'noise' when gains are deferred and reversed over time.

b) Feedback received indicates that, in general, companies in the UK do not disclose information about restricted gains and losses, currently recognised under IAS 28, as they tend not to be material.

c) At times it is challenging for preparers to gather complete and timely information from their associates and JVs, given that they do not exercise control.

d) Whilst users have indicated that the ED proposal may provide an opportunity for earnings management, it is considered that the risk of manipulation is likely to be limited in most cases, due to lack of materiality.

e) Calls for additional disclosures appear to be arising from regulators who are concerned about compliance, rather than a deficiency in the standard. Additional disclosures should not be needed given the existing disclosure requirements for related-party transactions under IAS 24. The UKEB understands that a preparer would consider the requirements in IAS 24 with due regard to the materiality (nature/magnitude) of the information, given the disclosure requirements under IAS 1 Presentation of Financial Statements paragraphs 7 and 31.

Paragraph 7 of IAS 1 includes a definition of materiality.

Material:

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

Materiality depends on the nature or magnitude of information, or both. An entity assesses whether information, either individually or in combination with other information, is material in the context of its financial statements taken as a whole.

Information is obscured if it is communicated in a way that would have a similar effect for primary users of financial statements to omitting or misstating that information. The following are examples of circumstances that may result in material information being obscured:

a) information regarding a material item, transaction or other event is disclosed in the financial statements but the language used is vague or unclear;

b) information regarding a material item, transaction or other event is scattered throughout the financial statements;

c) dissimilar items, transactions or other events are inappropriately aggregated;

d) similar items, transactions or other events are inappropriately disaggregated; and

e) the understandability of the financial statements is reduced as a result of material information being hidden by immaterial information to the extent that a primary user is unable to determine what information is material.

Assessing whether information could reasonably be expected to influence decisions made by the primary users of a specific reporting entity's general purpose financial statements requires an entity to consider the characteristics of those users while also considering the entity's own circumstances.

Many existing and potential investors, lenders and other creditors cannot require reporting entities to provide information directly to them and must rely on general purpose financial statements for much of the financial information they need. Consequently, they are the primary users to whom general purpose financial statements are directed. Financial statements are prepared for users who have a reasonable knowledge of business and economic activities and who review and analyse the information diligently. At times, even well informed and diligent users may need to seek the aid of an adviser to understand information about complex economic phenomena.

Extract from paragraph 31 of IAS 1:

An entity shall also consider whether to provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users of financial statements to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.

Next steps

C22The IASB will continue redeliberating the ED proposals over the next few months, in line with the redeliberation plan outlined in paragraph 27 of Agenda Paper 13 for the IASB's June 2025 meeting.

C23The UKEB Secretariat will continue to monitor the IASB's redeliberation and tentative decisions and will continue to provide the Board with updates.

Annex 1: IASB's tentative decisions – February 2026

Impairment of an investment

Appendix D: Post-implementation Review of IFRS 9—Hedge Accounting

Purpose of this paper

D1The purpose of this paper is to provide the Board with an update on the IASB's post-implementation review (PIR) of the hedge accounting requirements in IFRS 9 Financial Instruments, and some preliminary UKEB Secretariat desktop research on this topic.

Background

D2In December 2025, the IASB decided to start the PIR. At its February 2026 meeting, the IASB discussed the objective, activities and timeline for the first phase of the PIR.

IASB February 2026 Meeting

D3IASB staff presented a project plan[^17] for phase one of the PIR. Phase one includes initial outreach with the IFRS Foundation's IFRS Accounting Advisory Groups, meetings with other small groups of stakeholders, and a review of academic research. The purpose of the initial outreach is to inform the request for information which will be used to seek feedback from stakeholders. Phase two of the project will consider the feedback received in the public consultation.

D4The project plan sets out the objective of the PIR. This includes consideration of whether:

a) The objective of the hedge accounting requirements in IFRS 9 is being met. This objective is described in the paper as: 'to represent, in the financial statements, the effect of an entity's risk management activities that use financial instruments to manage exposures arising from particular risks that could affect profit or loss'[^18].

b) The benefits to users from the resulting information are broadly as expected.

c) The costs of applying some or all of the new requirements and auditing and enforcing their application are broadly as expected.

D5The project plan indicates that the IASB staff expect the overall PIR to take around 24 months to complete. The timeline for phase one includes outreach to consultative groups from March to May 2026. This includes the Accounting Standards Advisory Forum, the IFRS Interpretations Committee, the Capital Markets Advisory Committee and the Financial Instruments Consultative Group, all of which are scheduled in March 2026.

D6The IASB expect to publish the request for information in the second half of 2026, with a 120-day comment period.

UKEB Secretariat preliminary desktop research

D7The UKEB Secretariat has carried out preliminary desktop research into the prevalence of hedge accounting among listed entities in the UK. A text-based search of annual report filed in 2025 referring to the term "hedge” identified 328 companies. The Secretariat reviewed 111 of these annual reports and identified that 68 of the 111 applied hedge accounting.

D8The preliminary analysis of those applying hedge accounting indicates that:

a) Hedge accounting is used across a wide range of industries.

b) 72% of entities reviewed applied IFRS 9 hedge accounting, while 22% of entities continued to apply IAS 39 hedge accounting requirements. In 6% of entities it was not clear what policy was applied.

c) Among those entities that used hedge accounting, IFRS 9 hedge accounting was used in all sectors reviewed. The most extensive use of IFRS 9 hedge accounting among the entities surveyed was in Industrial Goods and Services.

d) The use of IAS 39 was most prevalent in Financial Services, Banks, and Customer Products and Services. The majority of entities reviewed in those sectors applying hedge accounting used IAS 39.

D9The UKEB Secretariat will continue to review the preliminary analysis to develop our understanding of the use of IFRS 9 hedge accounting among UK entities.

Next steps

D10The UKEB Secretariat will continue to monitor developments.

Appendix E: Financial Instruments with Characteristics of Equity

Purpose of this paper

E1The 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).

Background

E2In November 2023, the IASB issued the ED which sought 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”[^19]. The UKEB issued its Final Comment Letter (FCL) in response to the ED in April 2024.

E3At its December 2025 meeting the IASB discussed initial feedback and project direction in relation to the 'fixed-for-fixed' proposals in the ED. At its February 2026 meeting, the IASB discussed and voted on possible refinements to the proposals in the ED to take account of stakeholder feedback.

IASB December 2025 Meeting

E4The ED proposed certain clarifications of when the 'fixed-for-fixed' condition in paragraph 16(b)(ii) of IAS 32 is met. These included introducing the concepts of 'preservation' and 'passage of time' adjustments.

E5The IASB staff reported mixed stakeholder feedback to the proposals[^20]. The papers noted that many stakeholders provided mixed views. While many respondents supported the efforts to provide additional guidance on particular practice questions, they disagreed with some proposals, or asked for further clarification or application guidance. Some stakeholders disagreed with the proposals, and considered them overly restrictive.

E6The UKEB FCL broadly welcomed the IASB proposals on the 'fixed-for-fixed' condition. However, the FCL recommended some clarifications to the proposed wording, and suggested that illustrative examples of both preservation and passage of time examples would be helpful. The UKEB also noted concerns that one illustrative example in the ED indicated that use of a benchmark interest rate in a contract would not meet the 'fixed-for-fixed' criteria, which would be a departure from current practice in the UK.

IASB February 2026 Meeting

E7IASB staff presented two papers[^21] to recommending finalising the ED proposals, subject to certain refinements. All thirteen IASB members tentatively voted in favour of the staff recommendations, which are summarised in the table below.

E8A number of the proposals appear to address concerns raised in the UKEB FCL, and to provide greater clarity in relation to the adjustments that would be permitted to meet the 'fixed-for-fixed' condition. In general, with the exception of the clarification relating to functional currency, these proposals would be expected to tighten the application of the 'fixed-for-fixed' criteria.

E9In relation to 'adjustments that are solely a function of time' IASB staff paper 5B explained that under the proposals contracts linked to benchmark interest rates would not be capable of meeting the 'fixed-for-fixed' condition, as they are not predetermined. This clarification would potentially represent a change to UK practice, as highlighted in the UKEB FCL.

Next steps

E10The IASB will continue to redeliberate the classification topics in the ED. The IASB staff presented an update to the project plan at the February meeting, with final amendments now expected in 2027, rather than the second half of 2026.

Appendix F: List of IASB projects

This Appendix provides a list of all active IASB projects[^22], including links to the IASB project page and where relevant, to the UKEB project page and any UKEB projects or comment letters. Items highlighted in grey are changed from the last report.