Adam Deller is a financial reporting specialist and lecturer


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There are many tasks that people often put off, pushing them back to the mythical place of getting round to sorting them ‘one day’. I currently have such a list involving fixing a broken shower and clearing out a garage.

These can be the jobs that in one way feel non-urgent but yet in another feel too big to even begin. Without a gentle shove in the right direction (often from a loved one who has had enough), the issues may never be resolved.

Many of us may not regard the International Accounting Standards Board (IASB) as a loved one, but it has certainly nudged us towards action, encouraging us to deal with some of the problems that maybe many of us have complained about for years.

As I noted last month, the IASB has issued a request for information on its agenda and work plan. It expects that in the next five years it would be able to start two to three large projects, or four to five medium projects, or seven to eight small ones.

As part of this, they have asked commenters to respond to 22 potential areas of financial reporting that people have noted problems with. In the previous column, we looked at some of the more common areas that have been noted and any potential changes that could arise. Here are a few more of the most significant areas.

Climate-related risks

This would be outside of the project considering a new set of sustainability standards (see ‘Sustainability reporting gets reaction’), but would seek to address the concern that climate-related risks are perceived as remote, long-term ones that are not fully covered in estimates made.

Changes to this would be likely to alter the timeframe of estimates looked at for impairment reviews or other uncertainties, ensuring a more comprehensive consideration of climate-related risks.

Discontinued operations

A range of issues have been raised in connection with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. These include the need for further guidance on particular loss-of-control events, such as a dilution of the shares held. There are also questions surrounding the application of rules associated with impairments and reversals.

Intra-group transactions between continuing and discontinued ops is a strong candidate for where the IASB should take action

In addition, commenters have raised questions about how to deal with intra-group transactions between continuing and discontinued operations.

As many of these issues were previously highlighted in the 2015 post-implementation review of IFRS 5, this could be a strong candidate for the IASB to take action. If it does, this is likely to be a medium-sized project.

Employee benefits

Most of us expressed great relief when the corridor approach under IAS 19, Employee Benefits, was removed, but questions still remain over the standard.

Some of these questions relate to the discount rates to be used but a far larger problem relates to hybrid pension plans. There has been an increase in the number of hybrid pension plans that contain characteristics of both defined contribution and defined benefit plans, and IAS 19 currently does not deal effectively with these.

To develop a new accounting requirement for these hybrid plans is likely to be a large project.

Inventory/cost of sales

The majority of comments on this relate to queries about how cost of sales are recognised following the introduction of IFRS 15, Revenue from Contracts with Customers.

The introduction of the revenue standard defined a number of areas in how to recognise revenue but has left people feeling that questions surrounding the timing of recognition of cost of sales or contract assets is less clear. If the IASB were to take this on, this would be a large project.

Other comprehensive income

The major issue regarding the treatment of ‘other comprehensive income’ (OCI) relates to the recycling of gains and losses, where items are recorded initially in OCI but then reclassified into statement of profit or loss at a later date.

Some standards require the recycling of gains or losses, whereas others prohibit this, which has led stakeholders to question the consistency of the rules. As any work surrounding this would impact a number of accounting standards, this would be a large project.

Have your say

Over the past two editions, this column has looked at eight of the possible 22 items to be added to the IASB workplan. As a reminder, this list is not exhaustive, and the IASB is inviting any comments people may have on any standard. This means that for those of you confused that IFRS 16 changed lease accounting for the lessees but decided to leave lessor accounting the same, you are still invited to dust off the typewriter and send your thoughts in.

Comments are to be received by 27 September 2021.