The IFRS Foundation has today published its annual report, including the audited financial statements, for the financial year ended 31 December 2017. The statements can be accessed here:



The following is a summarised update of the main discussion and tentative decisions taken by the IASB at its meeting on 22-23 May 2018.

For more details and comprehensive information on the IASB’s discussion see:


Primary Financial Statements

The Board discussed the following topics:

Additional proposals to improve the level of aggregation and disaggregation of line items in the primary financial statements and in the notes

The Board tentatively decided:

  • Not to develop a singled consolidated list of aggregation and disaggregation characteristics. Instead, the Board asked its staff to continue working on the proposals for improving disaggregation in the financial statements, which may include illustrating how different characteristics could be used to aggregate or disaggregate financial information without overriding specific aggregation or disaggregation requirements in individual IFRS. 
  • Not to introduce thresholds or rebuttable presumptions for aggregating or disaggregating financial information. Also, the board asked its staff to explore developing principle-based guidance that would encourage greater disaggregation of large residual or ‘other’ balances in the financial statements.
  • To develop a principle for determining the location of financial information in the primary financial statements or the notes.

Proposal to improve the analysis of expenses by function or by nature required by IAS 1

The Board tentatively decided:

  • To add to the requirements in IAS 1 the following factors to consider in deciding whether by-function or by-nature methodology provides the most useful information about financial performance:
  • which method provides the best information about the key components or drivers of profitability;
  • which method most closely matches how management reports internally to the board or key decision makers and the way the business is run;
  • peer industry practice; and
  • whether the allocation of expenses to functions would be so arbitrary that it would not provide a sufficiently faithful representation of the composition of an entity’s functions. In such cases, a ‘by-nature’ method should be used.
  • To require additional information on the nature of the expense when an entity provides an analysis of expenses using a by-function methodology.

Outstanding issues on management performance measures and adjusted earnings per share

The Board discussed the two issues that arose at the April 2018 Board meeting and  tentatively decided:

  • To further expand the list of subtotals/totals in paragraph 81A of IAS 1 Presentation of Financial Statements that would not be considered as management performance measures to include commonly used subtotals, such as profit before tax, profit from continuing operations, and gross profit defined as revenue less cost of sales.
  • That entities should not be required to disclose adjusted earnings per share when an entity has more than one management performance measure.


Disclosure Initiative – Targeted Standards-level Review of Disclosures

The Board tentatively decided that when developing and drafting disclosure requirements in future, the Board will:

  • Base all disclosure requirements on one or more specific disclosure objectives. These objectives should explain why the information is useful to the primary users of financial statements, and what these users are expected to do with the information.
  • Draft all disclosure requirements so they explicitly state the underlying objective(s) and clearly link each item of information with the related objective(s).


Rate-regulated Activities

The Board discussed the accounting model being developed for activities subject to defined rate regulation.

The Board tentatively decided:

  • That the measurement of regulatory assets should reflect estimates of the future cash flows that the assets will generate.  These cash flows should include amounts that result from:
    • the cost of assets used and operating expenses incurred;
    • any margins on the operating expenses incurred; and
    • any interest on the operating expenses incurred or returns on the cost of assets used.
  • That the measurement of regulatory assets should reflect changes in the estimates of the future cash flow generated by those assets.
  • The discount rate established at initial recognition should remain unchanged during the subsequent measurement of the regulatory assets.


Goodwill and Impairment

The Board tentatively decided:

  • Not to develop a document that would seek feedback solely about using the unrecognised headroom of a cash-generating unit (or group of units) as an additional input in the impairment testing of goodwill.
  • To pursue including in the value in use calculation expected cash flows from future restructuring and future performance enhancements that management is more likely than not to undertake.


IFRS 16 Leases – Lease Incentives – Annual Improvement

The Board discussed a proposal to amend Illustrative Example 13 accompanying IFRS 16 Leases in its next annual improvement to IFRS removing the reimbursement of leasehold improvements by a lessor.  The Board tentatively agreed the proposal.



27 July 2018ED/2018/1 - Accounting Policy Changes (Proposed amendments to IAS 8)