caalley logo

Welcome to the alley for Indian Chartered Accountants and other finance professionals

IASB calls time on pensions, fair value disclosure project

November 1, 2022

The International Accounting Standards Board has abandoned its proposals to amend the disclosure requirements in its pensions accounting and fair value measurement rulebooks.

Instead, board members decided to develop the proposals in their March 2021 exposure draft for use by the board when drafting disclosure requirements in future.

Board members were split, however, on how best to communicate the outcome of the project.

IASB chair Andreas Barckow said: “I agree […] that obviously it should form part of the project summary in the first place because these are the key learnings.

“But I also agree with the board members that if we just leave it there, it probably has the potential of getting lost.”

He added: “[W]hat’s even more worrisome to me is if we agree that the staff is right that this should be non-binding, I think the question of updating that document becomes a necessity.”

In total, 11 board members agreed on the compromise approach – dubbed the so-called middle ground in the papers prepared by staff for the meeting.

The IASB issued an exposure draft trialling a new approach to disclosures about pension obligations in March 2021.

The new model focused on a series of objectives aimed at teasing out the most relevant information, alongside a catch-all or high-level disclosure.

The board wanted to encourage preparers to take a broader view of disclosures, which have tended to emerge on a piecemeal basis across the board’s many standards.

The IASB decided at its July 2018 meeting to trial the approach with a series of amendments to both IAS 19 and International Financial Reporting Standard (IFRS) 13, Fair Value Measurement.

IPE reported in March, however, that the disclosure revamp had met with a largely mixed response.

In terms of the detail of the middle-ground option, board members signalled their support for the five elements featured in Agenda Paper 11B. This includes a decision to make no reference to IAS 1, paragraph 31, which deals with the assessment of materiality.

A major concern for the board is the status of any project output that the board might agree.

Typically, the board’s chair explained, a project summary was a final round-up of the project’s main conclusions. It was not an iterative document that the board could be expected to update in light of new developments.

In addition, there was also the question of what due process – if any – was appropriate for a document of that type.

Further complicating the situation was whether or not the project conclusions should be anchored in the IFRS conceptual framework. Board member Ana Tarca was of the view that they should.

Project manager Rachel Knubley argued, however, that the board’s work on disclosures was more about process than concepts.

As a result of board member comments during the meeting, staff will now draft a guidance document for the board to use when developing disclosure requirements.

The document will be published on the IFRS Foundation website.

[IPE Magazine]