The following is a summarised update of the main discussions and tentative decisions taken by the IASB at its meeting on 11, 12 and 13 December 2018.  

For more details and comprehensive information on the IASB’s discussion see: https://www.ifrs.org/news-and-events/updates/iasb-updates/december-2018/

Updating a reference to the Conceptual Framework in IFRS 3 Business Combinations

The Board tentatively decided:

  • To specify that levies within the scope of IFRIC 21 and other obligations within the scope of IAS 37 should be recognized on the acquisition of a business only if they would be identified as present obligations by an entity applying IFRIC 21 or IAS 37; 
  • To clarify that in applying the IFRS 3 recognition principle, an acquirer does not recognize contingent assets;
  • That the amendments should be applied to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after a date to be decided at the completion of the due process;
  • To permit earlier application without the need to disclose the fact that the amendments have been adopted early; and
  • To permit entities to apply the amendments to annual reporting periods beginning before 1 January 2020 if:
    • the proposed amendments are issued before 1 January 2020; and
    • they also apply all the amendments made by Amendments to References to the Conceptual Framework in IFRS Standards at the same time.

The Board also tentatively decided that these proposed amendments should be exposed for comment with a view of publishing it in the first half of 2019.

Primary Financial Statements

The Board tentatively decided:

  • To prohibit the use of columns to present information about management performance measures in the statement(s) of financial performance;
  • To add operating profit before depreciation and amortization to the list of measures that are not considered to be management performance measures; and
  • Not to provide examples of when it is potentially misleading for an entity to use the label ‘EBIT’ or ‘EBITDA’ to describe performance measures included on the financial statements. 

Disclosure Initiative

The Board tentatively decided to require the disclosure of material accounting policies rather than significant accounting policies as currently required by paragraphs 117-124 of IAS 1 Presentation of Financial Statements.

Dynamic Risk Management (DRM) Model

The Board tentatively decided that:

  • An entity can apply the DRM model if designation of the asset profile, target profile and designated derivatives does not reflect any imbalance that would create misalignment that could result in an accounting outcome inconsistent with the purpose of the DRM model; and
  • There must be an economic relationship between the target profile and the combination of the asset profile and designated derivatives.

IFRS 17 Insurance Contracts

The Board tentatively decided to amend IFRS 17 so that the presentation of insurance contract assets and liabilities in the statement of financial position is determined using portfolios of insurance contacts rather than groups of insurance contracts.

At future Board meetings the Board will:

  • discuss the prohibition of retrospective application of the risk mitigation option;
  • consider the remaining topics discussed in Agenda Paper 2D Concerns and implementation challenges for the October 2018 Board meeting.

After the Board has considered all individual topics, the Board plans to consider the package of amendments as a whole, before concluding whether the benefits of making the amendments outweigh the costs.

Rate-regulated Activities

The Board discussed the discount rate to be used when measuring regulatory assets or regulatory liabilities arising from regulatory timing differences.

Regulatory timing differences that relate to items forming part of the regulatory capital base

The Board tentatively decided that an entity should include only the estimated future cash flows arising from the original regulatory timing difference and discount them at a rate of 0% i.e. the entity should exclude the cash flows relating to the regulatory overall return and recognise that overall return as revenue in profit or loss as it is included in the rate charged to customers.

Regulatory timing differences that relate to items forming part of the regulatory operating expenditure

The Board tentatively decided that:

  1. A discount rate that reflects, at least, compensation for the time value of money and uncertainty inherent in the cash flows should be applied; but
  2. When the regulatory interest rate or regulatory return rate provides an additional return above the compensation in 1), that regulatory interest rate or regulatory return rate should be used as the discount rate unless there is clear evidence that the excess relates to an identifiable transaction or event.

Regulatory timing differences relating to items of expense or income that will form part of the regulatory operating expenditure or the regulatory capital base when cash is paid or received

The Board tentatively decided to reject the staff’s recommended approach.

Implementation Matters

The Board tentatively decided:

  • Not to amend IAS 8 Accounting Estimates and Errors to specify when an entity should apply accounting policy changes resulting from Agenda Decisions published by IFRS Interpretations Committee;
  • In respect of the Exposure Draft Annual Improvements to IFRS Standards 2018-2020 Cycle:
    • not to permit or require previous first-time adaptors to apply the proposed amendment to IFRS 1 retrospectively; and
    • that the comment period for the Exposure Draft  should be at least 90 days.

In addition to the topics above, the Board received an update on the following matters:

  • Provisions
  • Business Combinations under Common Control
  • Research Programme
  • Pension Benefits that Depended on Asset Returns
  • IBOR Reform and its Effects on Financial Reporting

The Board was not asked to make any decisions in respect of these matters.


On 4 January 2019, RSM International submitted the following comment letters to the IASB on its Discussion Paper:

  • DP/2018/1 - Financial Instruments with Characteristics of Equity

The comment letters listed above are available at: https://www.ifrs.org/projects/work-plan/financial-instruments-with-characteristics-of-equity/comment-letters-projects/dp-fice/#comment-letters