[Global Financial Insights] The International Accounting Standard Board (IASB) Is Expected to Publish Three Exposure Drafts and More

Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update.

1. The International Accounting Standard Board (IASB)is expected to publish three exposure drafts

In the forthcoming week, International Accounting Standard Board (IASB) is expected to publish three consultations. The consultations shall include an exposure draft on translation to a “Hyperinflationary Presentation Currency”, an exposure draft on amendments to IFRS 19, Subsidiaries without Public Accountability: Disclosures, and an exposure draft on climate-related and other uncertainties in the Financial Statements. The draft on translation to hyperinflationary presentation currency shall be part of IAS 21, The Effects of Changes in Foreign Exchanges Rates. The brief of these exposure drafts areas below:

1.1 Use of Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity

In the earlier meeting held on 19th March 2024, IASB has discussed the proposed amendments to IAS 21, wherein they discussed about the disclosure requirements for subsidiaries without public accountability and the due process requirements. These amendments relates to the non-hyperinflationary entities with a presentation currency that is hyperinflationary. The majority of members at the meeting agreed to the amendment and tentatively decided to propose that an eligible subsidiary that translates the results and financial position of a foreign operation that has a non-hyperinflationary functional currency into a hyperinflationary presentation currency is required to disclose summarised financial information about the results and the financial position of that foreign operation. The International Accounting Standards Board (IASB) expects to publish its consultation on 25th July, 2024.

1.2 Amendments to IFRS 19,Subsidiaries without Public Accountability: Disclosures

IASB has been constantly updating the IFRS 19 to enhance the disclosure requirement of subsidiaries without public accountability. In its meeting held on 25th April, 2024, IASB tentatively decided to require an eligible subsidiary to apply the proposed amendments to IFRS 19 on 1 January 2027, the same effective date as the Standard itself, and also to permit an eligible subsidiary to adopt the proposed amendments to IFRS 19 earlier than that date. The International Accounting Standards Board (IASB) expects to publish its consultation on 30th July, 2024.

1.3 Climate-related and other uncertainties in the Financial Statements

IASB has decided to provide examples illustrating how an entity applies IFRS Accounting Standards to report the effects of climate-related and other uncertainties in its financial statements and also include the examples as illustrative examples that would accompany IFRS accounting standards. Furthermore, IASB is expected to publish an exposure draft to obtain feedback from stakeholders about the examples. The International Accounting Standards Board (IASB) expects to publish its consultation on 31st July, 2024.

Source: IFRS Foundation

2. IASB completes technical decisions on IFRS for SMEs accounting standard project, Rate-regulated activities project and post-implementation review of IFRS 15

The International Accounting Standard Board (IASB) has concluded its technical decision on three of its projects. These projects include the second comprehensive review of the IFRS for SMEs Accounting Standard, the Rate-regulated Activities, and the post-implementation review of IFRS 15, Revenue from Contracts with Customers project.

To enhance the efficiency of standards and to enable users with the comprehensive understanding of the SME financial statements, IASB conducted its periodic review of the SMEs Accounting Standard. The IASB is expected to issue the third edition of the SMEs Accounting standard in the first half of 2025 and the same shall be effective for the annual reporting period beginning on or after 1st January, 2027.

The IASB has also completed its redeliberations on the Rate-regulated Activities project. IASB is now focused on developing a new standard that shall provide users of financial statements with better information about the effects of rate regulation on companies financial performance and financial position. The IASB expects to issue the Standard in the second half of 2025 with a recommended effective date of 1 January 2029.

After the implementation of the IFRS 15, IASB has been constantly reviewing the post implementation effects of it. The post-implementation review has shown that the standard is working as intended and is providing users with more useful information about a company’s revenue.

Source: IFRS Foundation

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