"Beyond the GAAP" Newsletters in English

The IASB continues to be very busy with standard-setting work around the topic of financial instruments, with redeliberations ongoing on the proposed amendments to the rules on PPA and VPPA contracts, and the launch of a research project on amortised cost measurement. It has also begun new projects to clarify or improve some older standards, publishing an exposure draft to address application questions relating to the equity method (IAS 28) and launching another research project on the statement of cash flows (IAS 7).

At the end of May, the IASB published amendments to IFRS 9 and IFRS 7 on the classification and measurement of financial instruments, which are mandatory for financial periods commencing on or after 1 January 2026. In this issue, we look in detail at the content of these amendments, which introduce some changes and clarifications relating to financial liabilities settled using an electronic payment system, financial assets with contingent payment features, financial assets with non-recourse features, and contractually linked financial assets. They also require additional disclosures to be presented in the notes.

On 9 April 2024, the IASB published IFRS 18 Presentation and Disclosure in Financial Statements, the new standard that will replace the current IAS 1. This standard, the culmination of the Primary Financial Statements (PFS) project initiated in 2015, aims to improve the comparability, quality and transparency of financial information for users of financial statements. It will apply retrospectively to reporting periods beginning on or after 1 January 2027 at the latest (subject to endorsement by the European Union, earlier application will be possible). Given the structural changes it introduces, we believe it is important to pay immediate attention to this new standard in order to anticipate the necessary changes to internal systems and processes for producing financial statements and, perhaps, to rethink the way in which financial performance is reported.

Last November, we reported the publication of an IASB exposure draft of proposed amendments to IAS 32, IFRS 7 and IFRS 1 on the classification of financial instruments with characteristics of equity (“FICE”). In this issue, we present the IASB's proposals on three of the topics covered by these amendments: how to account for rights and obligations arising from legal or regulatory requirements, instruments that are settled in the entity's own equity instruments, and obligations requiring the entity to purchase its own equity instruments (including puts on non-controlling interests). These proposals are sure to prompt reactions from stakeholders.

Happy New Year from everyone at Beyond the GAAP! The IASB work plan alone suggests that this new year will be a busy one on the accounting front. But the biggest new development in 2024 will be initial application of the European Sustainability Reporting Standards (ESRS), for the first companies falling within the scope of the Corporate Sustainability Reporting Directive (CSRD) – i.e. large undertakings that are public-interest entities and that have more than 500 employees, as per the Accounting Directive.