IASB publishes exposure draft on volume 11 of Improvements to IFRSs

Keywords: Mazars, Thailand, IASB, IFRS, Accounting, Improvements, Financial Instruments, Consolidated Financial Statements, Cash Flows 

On 12 September, the IASB published an exposure draft on volume 11 of Annual Improvements to IFRS Accounting Standards, available here. 

The exposure draft proposes necessary but minor amendments (i.e. minor clarifications and corrections of oversights or conflicts) to five standards, discussed further below. 

IFRS 1 – First-time Adoption of International Financial Reporting Standards  

The proposed amendment relates to hedge accounting by a first-time adopter. The Board is proposing to amend paragraphs B5 and B6 of IFRS 1 in order to improve their consistency with the hedge accounting requirements of IFRS 9 – Financial Instruments.  

IFRS 7 – Financial Instruments: Disclosures 

The proposed amendments relate to both the body of the standard and the implementation guidance. 

Firstly, the Board is proposing to amend paragraph B38 of IFRS 7 to avoid potential confusion arising from an obsolete cross-reference to a paragraph that was deleted on publication of IFRS 13 – Fair Value Measurement. 

IFRS 9 – Financial Instruments 

The exposure draft proposes two amendments to IFRS 9. 

The first relates to derecognition of lease liabilities by a lessee. The IASB is proposing to amend paragraph 2.1(b) (ii) of IFRS 9 to add a cross-reference to paragraph 3.3.3 of the same standard. The Board believes this will avoid any potential confusion. However, we might question whether this amendment will adequately address the recognition of rent concessions in the lessee’s accounts, and the relationship between the requirements of IFRS 16 on lease modifications and the requirements of IFRS 9 on derecognition of financial liabilities. 

The second proposed amendment to IFRS 9 aims to remove any potential confusion around the definition of “transaction price”. This confusion arises from the fact that Appendix A of IFRS 9 refers to the definition of “transaction price” set out in IFRS 15 – Revenue from Contracts with Customers, but the term “transaction price” is used elsewhere in IFRS 9 in a different sense. 

IFRS 10 – Consolidated Financial Statements 

The proposed amendment relates to the concept of a “de facto agent”. Once again, the IASB is aiming to resolve potential confusion, resulting from inconsistency between two paragraphs of the standard (B73 and B74 of IFRS 10). 

IAS 7 – Statement of Cash Flows  

Here again, the IASB is aiming to eliminate potential confusion arising from the use of the term “cost method” in paragraph 37 of IAS 7, as this term is no longer defined in IFRS Accounting Standards. 

Comments on the exposure draft should be sent to the IASB by 11 December 2023 at the latest.