IFRS Accounting Standards

Revised standards – Annual Improvements to IFRS Accounting Standards – Volume 11

The IASB issued narrow-scope amendments to the following five standards and accompanying guidance:

• IFRS 1, First-time Adoption of International Financial Reporting Standards to address an inconsistency related to hedge accounting between IFRS 1.B6 and IFRS 9, Financial Instruments;
• IFRS 7, Financial Instruments: Disclosures to address potential confusion related to gain or loss on derecognition arising from an obsolete reference to a deleted paragraph included in IFRS 7.B38;
• Guidance on implementing IFRS 7 to address:
• an inconsistency between IFRS 7.28 and its accompanying guidance related to the disclosure of deferred difference between fair value and transaction price;
• a potential confusion regarding introduction and credit risk disclosures by clarifying in paragraph IG1 that the guidance does not necessarily illustrate all the requirements in the referenced paragraphs of IFRS 7 and by simplifying some explanations;
• IFRS 9, Financial Instruments to address a potential lack of clarity in the application of IFRS 9 related to lessee derecognition of lease liabilities and a potential confusion related to the meaning of the term ‘transaction price’ referenced in Appendix A to IFRS 9;
• IFRS 10, Consolidated Financial Statements to address a potential confusion related to the determination of a “de facto agent’ in IFRS 10.B73 and B74; and
• IAS 7, Statement of Cash Flows to address a potential confusion in applying IAS 7.34 that arises from the use of the term ‘cost method’, which is no longer defined in IFRS Accounting Standards. 

Effective for annual reporting periods beginning on or after January 1, 2026, with early application permitted.

Revised standard – Classification and Measurement of Financial Instruments

The IASB issued amendments to the classification and measurement requirements in IFRS 9, Financial Instruments in response to feedback from the 2022 Post-implementation Review of IFRS 9. The amendments clarify the requirements in areas where stakeholders had raised concerns, or where new issues had emerged since IFRS 9 was issued. The amendments:

• clarify the classification of financial assets with environmental, social and corporate governance (ESG) and similar features, including how contractual cash flows on loans with ESG-linked features should be assessed; and
• clarify how to account for the settlement of financial liabilities using electronic payment systems and provides an accounting policy option to allow a company to derecognize a financial liability before it delivers cash on the settlement date if specified criteria are met. An entity that elects to apply the derecognition option would be required to apply it to all settlements made through the same electronic payment system.

With these amendments, the IASB has also introduced additional disclosure requirements to enhance transparency for investors regarding investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features, for example features tied to ESG-linked targets.

Effective for annual reporting periods beginning on or after January 1, 2026. Earlier application of either all the amendments at the same time or only the amendments to the classification of financial assets is permitted.

New standard– Subsidiaries without Public Accountability: Disclosures

The IASB issued IFRS 19, Subsidiaries without Public Accountability: Disclosures that permits eligible subsidiaries, on a voluntary basis, to use IFRS Accounting Standards with reduced disclosures. Subsidiaries are eligible to apply IFRS 19 if they do not have public accountability and their parent company applies IFRS Accounting Standards in their consolidated financial statements. A subsidiary does not have public accountability if it does not have equities or debt listed on a stock exchange and does not hold assets in a fiduciary capacity for a broad group of outsiders.

The IASB issued an exposure draft on July 30, 2024 proposing amendments to IFRS 19 for new or amended disclosure requirements added or amended in other IFRS Accounting Standards after February 28, 2021.

Effective for annual reporting periods beginning on or after January 1, 2027, with early application permitted.

New standard – Presentation and Disclosure in Financial Statements

The IASB issued IFRS 18, Presentation and Disclosure in Financial Statements that has reshaped financial reporting and replaces IAS 1, Presentation of Financial Statements. This new Standard sets out the overall requirements for presentation and disclosures in the financial statements and introduced new requirements such as three new defined categories and two new subtotals in the Statement of Profit and Loss and the disclosure of management-defined performance measures. It also enhanced aggregation and disaggregation requirements in the financial statements.

Effective for annual reporting periods beginning on or after January 1, 2027, with early application permitted.

Revised standard – Lack of Exchangeability

The IASB issued amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates to clarify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. A currency is exchangeable when the company is able to obtain the other currency within a time frame that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations. When the currency is not exchangeable, the company is required to estimate the spot exchange rate that reflects the rate at which an orderly exchange transaction would take place at the measurement date between market participants under prevailing economic conditions. Additional information will be required to be disclosed to enable users to evaluate how a currency’s lack of exchangeability affects, or is expected to affect its financial performance, financial position, and cash flows. The amendments respond to stakeholder feedback and concerns about diversity in practice in accounting for a lack of exchangeability between currencies.

Effective for annual reporting periods beginning on or after January 1, 2025, with early application permitted.

Revised standards – Supplier Finance Arrangements

The IASB issued amendments to IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments: Disclosures. The amendments require qualitative and quantitative information to be provided about supplier finance arrangements. Typically, a supplier finance arrangement involves one or more finance providers offering to pay amounts that a company owes to its suppliers and the company agreeing to pay those finance providers with the same or different term than the original term with the suppliers.

The amendments supplement the current requirements in the IFRS standards that apply to reverse factoring and similar arrangements and enhances transparency to assist users in understanding the effects of these arrangements on a company’s liabilities, cash flows, liquidity risk and risk management.

Amendments to IAS 7 are effective for annual reporting periods beginning on or after January 1, 2024, with early application permitted. The amendments to IFRS 7 are effective when the amendments to IAS 7 are applied by the company.

Revised standard – Presentation of financial statements: non-current liabilities with covenants

The IASB issued narrow-scope amendments to IAS 1 to clarify that covenants to be complied with after the reporting date of the company do not affect the classification of a liability as current or non-current at the reporting date. Only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, the amendments clarify that a company has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months.

Effective for annual reporting periods beginning on or after January 1, 2024, with early application permitted.

Revised standard – Leases: lease liability in a sale and leaseback

The IASB issued narrow-scope amendments to IFRS 16 to clarify how a seller-lessee subsequently measures a sale and leaseback transaction that satisfies the requirements in IFRS 15 to be accounted for as a sale. A seller-lessee is required to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognizing in profit or loss any gain or loss relating to the partial or full termination of a lease.

Effective for annual reporting periods beginning on or after January 1, 2024, with early application permitted.

Exposure draft - Provisions - Targeted Improvements – Proposed amendments to IAS 37

The IASB issued an exposure draft aimed at improving the requirements for recognizing and measuring provisions on company balance sheets. Provisions are liabilities of uncertain timing or amount. The proposed amendments to IAS 37 clarify how companies assess when to record provisions and how to measure them. The amendments also require companies to provide more information about the measurement. The proposals would most likely be relevant for companies that have large long-term asset decommissioning obligations or are subject to levies and similar government-imposed charges.

Comments are requested by March 12, 2025.

Exposure draft – Equity Method of Accounting – IAS 28 Investments in Associates and Joint Ventures

The IASB issued an exposure draft proposing amendments to IAS 28 to add to and clarify how to apply the equity method. New disclosure requirements to enhance the information companies provide about these investments are also proposed to IFRS 12, Disclosure of Interests in Other Entities and IAS 27, Separate Financial Statements. The exposure draft does not specify an effective date for the amendments.

Comments are requested by January 20, 2025. A discussion of the feedback received is expected to begin in Q2 2025.

The AcSB also issued an exposure draft. Comments to the AcSB are requested by January 8, 2025.

Exposure draft – Climate-related and Other Uncertainties in the Financial Statements

The IASB issued an exposure draft proposing to provide eight illustrative examples to accompany IFRS Accounting Standards. These examples would illustrate how an entity applies IFRS Accounting Standards to report the effects of climate-related and other uncertainties in its financial statements.

Comments are requested by November 28, 2024. A discussion of the feedback received is expected to begin in Q1 2025.

The AcSB has also issued an exposure draft. The comment period is closed. The AcSB approved its draft response letter at its October 2024 meeting.

Exposure draft – Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures

The IASB issued an exposure draft proposing updates to the newly released standard IFRS 19 for new or amended disclosure requirements added or amended in other IFRS Accounting Standards after February 28, 2021. The IASB proposes to reduce disclosure requirements in IFRS 19 so that the Standard will only include disclosure requirements that reflect its principles for reducing disclosure requirements. The IASB is also asking stakeholders whether it should reduce the disclosure requirements from the prospective IFRS Accounting Standard Regulatory Assets and Regulatory Liabilities.

Comments are requested by November 27, 2024. A discussion of the feedback received is expected to begin in Q1 2025.

The AcSB is not planning to respond to the IASB’s Exposure Draft.

Exposure draft – Translation to a Hyperinflationary Presentation Currency

The IASB issued an exposure draft proposing to amend IAS 21, The Effects of Changes in Exchange Rates to require that when an entity translates amounts from a functional currency that is the currency of a non-hyperinflationary economy to a presentation currency that is the currency of a hyperinflationary economy, the entity translates those amounts, including comparative amounts, using the closing rate at the date of the most recent statement of financial position.

Comments are requested by November 22, 2024. A discussion of the feedback received is expected to begin in Q1 2025.

The AcSB is not planning to respond to the IASB’s Exposure Draft, as this issue is not widespread for Canadian entities.

Exposure draft – Contracts for Renewable Electricity

The IASB issued an exposure draft proposing to amend IFRS 9, Financial Instruments and IFRS 7, Financial Instruments: Disclosures to ensure that financial statements more faithfully reflect the effects that renewable electricity contracts have on a company. The proposals would:

• address how the ‘own-use’ requirements would apply;
• permit hedge accounting if these contracts are used as hedging instruments; and
• add disclosure requirements to enable investors to understand the effects of these contracts on a company’s financial performance and future cash flows.

The comment period is closed. Final amendments are expected to be issued in December 2024.

Exposure draft – Business Combinations – Disclosures, Goodwill and Impairment

The IASB issued an exposure draft proposing to amend IFRS 3, Business Combinations and IAS 36, Impairment of Assets to:

• require companies to report the objectives and related performance targets of strategic acquisitions, including whether these are met in subsequent years;
• require companies to provide information about the expected synergies for all material acquisitions; and
• include targeted changes to the current impairment test in IAS 36 that would improve the effectiveness of the impairment test and reduce the cost and complexity of applying the test.

The comment period is closed. Feedback to the exposure draft is expected in December 2024.

Exposure draft – Financial instruments with characteristics of equity

The IASB issued an exposure draft proposing to amend IAS 32, IFRS 7 and IAS 1 to:

• provide additional clarity on how to distinguish debt instruments from equity instruments;
• require companies to disclose information to further explain the complexities of those instruments; and
• require separate presentation for amounts, including profit and total comprehensive income, attributable to ordinary shareholders from amounts attributable to other holders of equity instruments.

The comment period is closed. The final amendments are expected to be issued in 2026.

Respond to IASB’s Surveys – Accounting requirements for Intangibles

Respond to IASB’s Surveys – Accounting requirements for Intangibles The IASB is asking investors, companies and other stakeholders to help shape its project on accounting requirements for reporting on intangibles in financial statements. Respond by November 30, 2024.

Access the short survey:

• Investors
• Companies and other stakeholders

Additional non-authoritative guidance

To stay ahead of the curve, find additional non-authoritative guidance to help you navigate the application of IFRS Accounting Standards.

Compilation of IFRS Interpretations Committee Agenda Decisions

• IFRS Interpretations Committee Agenda Decisions – May 2024 to October 2024 (IFRS Foundation, 2024)
• IFRS Interpretations Committee Agenda Decisions – November 2023 to April 2024 (IFRS Foundation, 2024)
• IFRS Interpretations Committee Agenda Decisions – May 2023 to October 2023 (IFRS Foundation, 2023)
• IFRS Interpretations Committee Agenda Decisions – November 2022 to April 2023 (IFRS Foundation, 2023)
• IFRS Interpretations Committee Agenda Decisions (AcSB,2024)

AcSB IFRS Accounting Standards Discussion Group

• Searchable past meeting topics (AcSB, 2024)

IFRS Project Summaries

• Project Summary and Feedback Statement: Post-implementation Review of IFRS 15 Revenue from Contracts with Customers (IASB, September 2024)
• Project Summary and Feedback Statement: Post-implementation Review of IFRS 9 Financial Instruments – Impairment (IASB, July 2024)
• Summary of IASB’s project on Business Combinations under Common Control (IASB, April 2024)
• Summary of IASB’s project on extractive activities (IASB, December 2023)

General Guidance

• Canadian securities regulators publish report on continuous disclosure reviews (CSA, 2024)
• Clearing the smog: Accounting for Carbon Allowances in Financial Statements (ESMA,2024)
• IVSC Perspectives Paper: ESG & Real Asset Valuation (International Valuation Standards Council, 2024)
• IVSC Perspectives Paper: Making Intangibles More Tangible: Series Lessons (International Valuation Standards Council, 2024)
• IVSC Perspectives Paper: Inspection of Tangible Assets (International Valuation Standards Council, 2024)
• Using the IFRS Digital Taxonomies – A Guide for Regulators Implementing the IFRS Digital Taxonomies in a Digital Filing System (IFRS Foundation, 2024)
• Summary of national accounting standard-setters’ research on materiality judgment guidance (IFRS Foundation, 2024)
• UK Financial Reporting Council review findings on IFRS 13 Fair value measurement (FRC, 2023)
• IAS 1 Presentation of Financial Statements – Additional disclosure considerations for companies engaging in crypto-asset activities (AcSB, 2022)
• Framework for Reporting Performance Measures – voluntary guidance for enhanced decision making (AcSB, 2021)
• Accounting for Crypto-asset Activities: Crypto-asset Holdings – Payment Tokens (AcSB, 2023)
• An Introduction to Accounting for Cryptocurrencies under IFRS (CPA Canada, 2018)

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