The International Financial Reporting Interpretations Committee (IFRIC) has backtracked on earlier proposals to relax the likely impact of amendments affecting the treatment of defined benefit (DB) pension fund remeasurements.
The committee will now recommend that the International Accounting Standards Board (IASB) approve the changes to International Accounting Standard 19, Employee Benefits, (IAS 19) with no update to the proposed amendments.
Committee member Reinhard Dotzlaw said: “I agree with the staff proposals and I also agree with the staff proposal to amend the basis for conclusions not to give a steer as to whether it would affect the timing of, and frequency of, remeasurement.
“In my mind that is based on a materiality decision and preparers would consider the materiality of a plan amendment in the context of the financial statements as a whole.”
There was broad support among committee members for the proposal.
The committee signalled it would also include a reference to materiality in the package it sends back to the IASB.
The proposed amendments will force entities to use updated assumptions to measure service cost and net interest for the remainder of the reporting period when remeasuring DB liabilities under IAS 19.
When developing the proposed amendments, the board argued that there would be no changes to how and when DB sponsors would remeasure the net liability. However, respondents to the amendments warned that the proposed changes could affect the frequency and timing of remeasurements.
In response, the IFRIC proposed removing minor plan amendments from the scope of the changes. The board, however, disagreed with this analysis.
As part of their analysis, IFRIC staff conceded that the proposals could affect where and when entities remeasure net DB liabilities.
Accordingly, IFRIC staff proposed that the IASB should update the discussion in the “basis for conclusions” to the amendments.
However, some board members had reservations about this proposal and instead referred the matter back to the committee for it to consider the wisdom of including minor plan amendments in the scope of the amendments.
IASB accounting framework nears completion
Meanwhile, the IASB has concluded its deliberations on its conceptual framework project and cleared staff to commence balloting on the updated framework document.
The board’s conceptual framework – which forms the basis for its standard-setting activities – has been a battleground between some investor groups and the board in recent years.
Critics of the board’s framework argued that it ought to include a reference to prudence as a brake on the excesses that led up to the 2008 financial crisis.
The IASB removed the concept from the 2010 iteration of its framework.
According to the latest IASB workplan, the board is slated to issue the finalised framework during the final quarter of the year.
Staff told the board last November that they expect the new framework to have little impact on preparers.
FRC seeks GAAP feedback
The UK Financial Reporting Council (FRC) has issued for public comment a series of amendments to FRS 102, the UK GAAP (‘generally accepted accounting principles’) source for unlisted entities.
The amendments, which are open for public comment until 30 June 2017, affect directors’ loans, intangible assets, investment property, the classification of financial instruments, and the definition of a financial institution.
If confirmed, the proposals will apply from 1 January 2019.
Separately, the FRC is reviewing its for process to bring changes to major international reporting standards, such as those covering financial instruments accounting under IFRS 9, as well as leasing and revenue recognition.
The regulator said it was currently reviewing responses to its September 2016 consultation on the matter.
Any changes to UK GAAP will not take effect until 1 January 2022. The FRC added that it would consult on any such proposals “toward the end of the third quarter of 2017”.