Welcome to the IASB Update


The IASB met in public on 16 December 2014 at the IASB offices in London, UK.

The topics for discussion were:

• IFRS for SMEs: Comprehensive Review 2012–2014 (Agenda Paper 5)
• Post-implementation Review: IFRS 3 Business Combinations (Agenda Papers 12A-12B)
• IAS 40 Investment Property: Accounting for a structure that lacks the physical characteristics of a building (Agenda Paper 12C)
• IFRIC Update (Agenda Paper 12D)
• Leases (Agenda Paper 3)
• Disclosure Initiative (Agenda Paper 11)

At its November 2014 meeting, the IASB finalised its technical discussions on the amendments to the IFRS for SMEs resulting from the initial comprehensive review of the IFRS for SMEs. Consequently, the IASB met on 16 December to review the due process steps taken so far and decide whether the staff should begin the balloting process for those amendments. Agenda Paper 5: Due process steps and permission for balloting

The IASB considered the due process steps undertaken in developing the proposals. All IASB members agreed that the proposed amendments should be finalised without re-exposure. All IASB members confirmed that they are satisfied that the IASB has completed all of the necessary due process steps on the project to date and therefore instructed the staff to commence the balloting process for the amendments to the IFRS for SMEs. One IASB member declared her intention to dissent from the publication of the final amendments.

Next steps

The staff will commence the balloting process of the amendments to the IFRS for SMEs. The amendments are expected to be issued in the first half of 2015.

Some respondents to the Exposure Draft of the proposed amendments to the IFRS for SMEs and some members of the SME Implementation Group raised general issues about the IFRS for SMEs that go beyond the scope of the comprehensive review. Those issues included, for example, support for the implementation of the IFRS for SMEs and improving engagement with stakeholders. The IASB will discuss these issues in early 2015 together with comments raised in response to Question 7 in the Exposure Draft about the procedures surrounding future reviews of the IFRS for SMEs.

On 16 December the IASB discussed the feedback received in the post-implementation review (PIR) on the most significant areas of IFRS 3 Business Combinations. The IASB also discussed a comparison of the feedback received on the Request for Information with a review of relevant academic literature.

In the light of these discussions, the IASB broadly agreed with the classification of the significance of the identified areas of IFRS 3 recommended by the staff in Agenda Paper 12B. All fourteen IASB members agreed with this decision.

Next steps

The staff will commence drafting the Feedback Statement. The IASB expects to publish the Feedback Statement in Q1 of 2015.

On 16 December, the IASB considered an issue that had previously been discussed by the Interpretations Committee. The issue was whether an entity should apply IAS 40 Investment Property to account for a structure, such as a telecommunication tower, that lacks the physical characteristics of a building, if the entity lets spaces in the structure to tenants to earn rentals.

The Interpretations Committee had questioned whether such a structure qualifies as a ‘building’ because it lacks the features usually associated with a building, such as walls, floors and a roof, but had expressed support for considering whether the scope of IAS 40 should be broadened to include such structures. However, the Interpretations Committee was concerned that the question could also be raised in respect of other structures, such as gas storage tanks and advertising billboards and referred the issue to the IASB.

In July 2014 the IASB directed the staff to undertake preliminary research to help the IASB to decide how to proceed. At this meeting, the IASB considered a summary of the outreach and analysis performed by the staff, and to decide what future action should be taken. The IASB decided not to pursue this issue further at the current time because there appeared to be limited demand for fair value accounting for these types of structures, and limited diversity in practice.

Eight of the fourteen IASB members agreed with this decision.

Next steps

No further work is planned on this issue.

The IASB received an update from the November 2014 meeting of the IFRS Interpretations Committee (the 'Interpretations Committee'). Details of this meeting were published in the IFRIC Update, which is available by clicking here.

The FASB and the IASB (the boards) met on 16 December 2014 to continue redeliberating the proposals in the May 2013 Exposure Draft Leases, specifically continuing the discussion from the October 2014 joint Board meeting about the definition of a lease.

Agenda Paper 3A: Definition of a lease—Ability to derive the benefits from directing the use of an identified asset

The boards tentatively decided not to include in the definition of a lease a requirement that the customer must have the ability to derive the benefits from directing the use of an identified asset on its own or together with other resources that are sold separately or that can otherwise be sourced in a reasonable period of time. Accordingly, a lease is defined as tentatively decided by the boards at the October 2014 joint board meeting.

Eleven IASB members agreed with this decision and three disagreed. Six FASB members agreed with this decision and one disagreed.

Next steps

The boards will continue their redeliberations at a future board meeting.

The IASB met on 16 December to continue its discussion on topics to be included in the Principles of Disclosure Discussion Paper as part of its Disclosure Initiative. The topics discussed were:

1. cohesiveness in financial statements; and
2. ‘cash and cash equivalents’ and the management of liquid resources.

Agenda Paper 11A: Cohesiveness in financial statements

The IASB tentatively decided that:

1. the concepts underlying cohesiveness should be included in the communication principle on linking information in IFRS financial statements; and
2. any changes to IFRS arising from the Disclosure Initiative should not include a separate principle requiring cohesiveness across a complete set of financial statements.

Ten IASB members agreed with this decision and three IASB members disagreed. One IASB member was absent.

Agenda Paper 11B: cash flow statements—‘cash and cash equivalents’ and the management of liquid resources

The IASB discussed a paper prepared by the UK Financial Reporting Council that set out tentative views of its own staff as follows:

1. the statement of cash flows should focus on flows of cash, rather than ‘cash and cash equivalents’.
2. the cash flow statement should highlight separately an entity’s cash flows relating to liquid resources and the entity’s policy for managing such resources; and
3. net presentation of cash flows, other than those relating to operating activities, should be permitted only for cash flows relating to financial instruments of the same class.

No decisions were made.

Next steps

At its January meeting the IASB expects to receive an update on the ongoing work in its Disclosure Initiative.