Feedback on Agenda Consultation Document Expected Late this Year
FASB will discuss public feedback received from its agenda consultation document later this year through early next year, a process to ensure it properly allocates resources and stays the course of its mission to service U.S. companies, according to remarks by Chair Richard Jones. The board in late June issued Invitation-to-Comment (ITC) 2021-004, “Agenda Consultation,” to solicit broad public input about which accounting topics should be added to its five-year technical agenda. “What we learn from this process will help ensure we continue to allocate resources to achievable standard-setting projects that fulfill our primary mission of improving financial accounting and reporting standards and addressing topics that are of the highest priority to our stakeholders,” Jones said in a quarterly board update posted on August 24. One of his priorities as chair is “to stay focused on projects that we can, in fact, bring to a successful conclusion,” Jones wrote. “Since mid-2020, we’ve moved through each project on our agenda, setting a course for completing those that present an achievable path to standard setting—and removing those that don’t,” said Jones. “During the second quarter, we reached 95% completion of this existing agenda review. I expect we will complete the rest shortly—just in time to create more capacity for priority projects that surface as a result of the agenda consultation process.”
IFRS Committee to Discuss Accounting Questions Related to Leases, Warrants, Cash Flows
When the IFRS Interpretations Committee meets on September 14-15, it will determine whether to finalize its proposed views that clarify technical questions on nonrefundable value added tax (VAT) on lease payments, and on warrants that are initially classified as financial liabilities. The committee will also discuss its proposed tentative views on measuring the liability that arises from the sale of a leaseback transaction, according to committee meeting papers. An analysis of comment letter responses and direction for the committee’s views will be discussed. The three topics proposed explanations of how to approach fact-specific issues that arose in applying international financial reporting standards (IFRS) with respect to:
- how a lessee accounts for any non-refundable value-added tax (VAT) charged on lease payments (decisions were published in March for public comment);
- whether, in applying International Accounting Standard (IAS 32), Financial Instruments: Presentation, an issuer reclassifies a derivative financial liability to equity after initial recognition in particular circumstances (decisions published in March for public comment); and
- how to subsequently measure the liability that arises from a sale and leaseback transaction, in particular when the leaseback payments include variable payments linked to future performance or use of the underlying asset that are excluded from the measurement of a lease liability (decisions published in November 2020 for public comment).
Advisory Forum Set to Meet on October 1
The Accounting Standards Advisory Forum (ASAF), a panel of national accounting rulemakers from across the globe, will meet virtually on October 1, according to an IFRS Foundation alert. The ASAF will share views on four IASB projects: the equity method, management commentary, primary financial statements, and rate-regulated activities. Discussions on the equity method, an accounting technique, will focus on the project’s objective to assess whether application questions with the equity method, as set out in IAS 28, Investments in Associates and Joint Ventures, can be addressed in consolidated and individual financial statements by identifying and explaining principles in IAS 28. In October 2020, the IASB decided that, to achieve the objective, it would apply the following approach to the project: identify application questions and decide which of these questions to address; address the application questions by identifying and explaining the principles in IAS 28. Identifying and explaining these principles would allow the IASB to develop new requirements (or application guidance) which would amend the standard.