IFRS news: November 2019

IFRS IC decision on presentation of uncertain tax liabilities

At a glance

The IFRS Interpretations Committee (IC) concluded that an entity is required to present uncertain tax balances as current or deferred tax assets or liabilities. Such balances are not presented as provisions. Entities that present uncertain tax liabilities (or assets) classified on lines other than current or deferred tax assets or liabilities should  consider the impact of the agenda decision on this presentation.

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The latest on IFRS 17 implementation

At a glance

On 22 October 2019, the IASB (‘Board’) considered the feedback gathered from the outreach activities undertaken by Board members and staff during July to September 2019. This feedback did not include an analysis of the 121 comment letters received on the Exposure Draft.

Most stakeholders welcomed the proposed amendments, but suggested that some amendments should go further.

No technical decisions were taken at this meeting. The Board expects to consider a summary of the comment letters received and a project plan for the re-deliberations at the November Board meeting.

The views in this are based on our observations from the 22 October 2019 meeting, and they might differ in some respects from the official report of the meeting that will be published by the IASB in an IASB Update at a later date.

The IASB considered a summary of the feedback gathered during outreach on the  proposed amendments to IFRS 17

1. On 26 June 2019, the Board published the Exposure Draft, ‘Amendments to  IFRS 17’ (‘ED’). The ED responded to some of the concerns and challenges  raised by stakeholders, proposing  amendments intended to support entities implementing IFRS 17 by reducing implementation costs and by making it easier for entities to explain results when applying IFRS 17 to users of financial statements.
2. The ED’s 90-day comment period ended on 25 September 2019. During the ED’s comment period, Board members and staff met with stakeholders in various round-table meetings and discussion forums to explain the proposed amendments and to obtain feedback from stakeholders.
3. On 22 October 2019 the Board considered the feedback gathered during the comment period from outreach on the ED. No technical decisions were taken at the meeting.
4. Overall, stakeholders expressed support for the Board considering the issues raised and proposed reliefs. However, some stakeholders believe that the scope of some of the proposed amendments is too narrow. In Europe, some stakeholders commented on areas which the Board had previously considered in preparing the Standard but for which the Board did not propose  amendments in the ED.
5. Stakeholders did not oppose the proposed one-year deferral of the effective date to 1 January 2022. However, some stakeholders suggested deferring the effective date of IFRS 17 by two years to allow entities more time for implementation, whereas other insurance entities expressed concerns about the  increased costs of a further delay. Several Board members expressed the importance of feedback received from the users of financial statements regarding further delay of the effective date. Many users believe that IFRS 17 is necessary to increase investment in the insurance sector and that the opportunity cost of not being able to  invest in the sector outweighs the additional cost for preparers to implement the Standard.
6. Some stakeholders viewed the editorial correction to paragraph B107, which  specifies that an entity should assess contracts eligible for the variable fee  approach at an individual contract level, to be a major change to the  requirements of IFRS 17. The staff noted that the change was made to make the  wording consistent between paragraphs B101 and B107, but the feedback  suggests entities are assessing eligibility at a group level rather than at an  individual contract level.
7. One of the areas for which the Board did not propose amendments in the ED relates to paragraph B137, which requires that entities do not change accounting estimates made in previous interim financial statements when  applying IFRS 17 subsequently. The staff noted that many stakeholders, across multiple jurisdictions, raised concerns about the effect of applying  paragraph B137.
8. Details of the outreach and a summary of the feedback received by the Board  and staff members on specific questions raised in the ED can be found here.