Annual Improvements to IFRS Accounting Standards – Volume 11

Background

On 18 July 2024 the International Accounting Standards Board (IASB) published Annual Improvements to IFRS Accounting Standards – Volume 11 (the Amendments). The Amendments will be effective for annual reporting periods beginning on or after 1 January 2026, with earlier application permitted.

In September 2023 the IASB published the exposure draft (ED) Annual Improvements to IFRS Accounting Standards – Volume 11. The UKEB’s response to the ED was submitted in December 2023. Further details on the UKEB’s influencing project on this ED can be found on the project webpage.

The Amendments in Annual Improvements to IFRS Accounting Standards – Volume 11

The Amendments are a collection of eight separate amendments to five IFRS Accounting Standards:

• IFRS 9 Financial Instrument - Transaction price. The amendment deletes the reference to ‘transaction price’ and revises the wording around it in paragraph 5.1.3; and removes the reference to IFRS 15 in Appendix A.
• IFRS 9 Financial Instrument - Lessee derecognition of lease liabilities. The amendment clarifies a lessee’s accounting for derecognition of a lease liability by adding a cross-reference to paragraph 3.3.3 of IFRS 9 in paragraph 2.1(b)(ii) of IFRS 9.
• IFRS 7 Financial Instruments: Disclosures - Gain or loss on derecognition. The amendment replaces the reference to paragraph 27A of IFRS 7, a paragraph that no longer exists, with a reference to paragraphs 72–73 of IFRS 13; and replaces the phrase ‘inputs that were not based on observable market data’ with ‘unobservable inputs’.
• IFRS 1 First-time Adoption of International Financial Reporting Standards - Hedge accounting by a first-time adopter. The amendment replaces the word ‘conditions’ with ‘qualifying criteria’ and adds cross-references to paragraph 6.4.1 of IFRS 9 in paragraphs B5–B6 of IFRS 1. This is to ensure consistency with the wording in IFRS 9.
• IFRS 10 Consolidated Financial Statement - Determination of a ‘de facto’ agent. The amendment clarifies the requirements in paragraph B74 of IFRS 10.
• IAS 7 Statement of Cash Flows - Cost method. The amendment replaces the term ‘cost method’, a term that is no longer defined in IFRS Accounting Standards, with ‘at cost’ in paragraph 37 of IAS 7.

The following two amendments to the Implementation Guidance accompanying IFRS 7 are not included in the mandatory sections of UK-adopted international accounting standards and therefore are not adopted by the Board or considered in this endorsement project:

• Implementation Guidance accompanying IFRS 7 Financial Instruments: Disclosures - Disclosure of deferred difference between fair value and transaction price. The amendment to paragraph IG14 of IFRS 7 improves its consistency with paragraph 28 of IFRS 7 which was amended upon the issuance of IFRS 13 Fair Value Measurement but no corresponding amendments were made to paragraph IG14 of IFRS 7.
• Implementation Guidance accompanying IFRS 7 Financial Instruments: Disclosures - Credit risk disclosures. The amendment adds a statement in paragraph IG1 of IFRS 7 that the implementation guidance accompanying IFRS 7 does not illustrate all the requirements in IFRS 7; and simplifies the wording in paragraph IG20B. This is to resolve potential confusion in paragraph IG20C accompanying IFRS 7 because a statement on the omitted illustrations is only included in paragraph IG20B but not paragraph IG20C.

UKEB Draft Endorsement Criteria Assessment

On 18 October 2024 the UKEB published its Draft Endorsement Criteria Assessment (DECA) on Annual Improvements to IFRS Accounting Standards – Volume 11 and welcomes stakeholders’ views on the potential adoption of the Amendments for use in the UK.

If you would like to comment, please complete the ‘Your Details’ form and provide feedback using the ‘Invitation to Comment’ template. The relevant documents are available at the foot of this page. Responses providing views on individual questions as well as comprehensive responses to all questions are welcome.

Please respond by close of business Friday 17 January 2025 to UKEndorsementBoard@endorsement-board.uk.

UKEB Outreach

The UKEB outreach plan includes a public consultation on the UKEB’s Draft Endorsement Assessment Criteria (DECA).

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