Endorsement of 2021 Narrow-scope amendments
The set of three Amendments to international accounting standards published in 2021 by the International Accounting Standards Board (IASB), with an effective date of 1 January 2023, (the ‘2021 Amendments’) was approved for adoption by all members of the UK Endorsement Board on 30 November 2022.
A link to the Adoption Statements of each Amendment and the text of the Amendments can be found here.
The 2021 Amendments adopted are:
- Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and to IFRS Practice Statement 2 Making Materiality Judgements).
- Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors).
- Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 Income Taxes).
The effective date of the UK-adopted 2021 Amendments is 1 January 2023 with earlier application permitted
The 2021 Amendments are not likely to lead to a significant change in accounting practice and do not meet the criteria for a post-implementation review under Regulation 11 in SI 2019/685.
Endorsement project
Background
The 2021 Amendments are narrow-scope amendments to international accounting standards that were issued by the IASB and exposed separately for public comment as the IASB considered they merited separate consultation and outreach.
The UKEB was not able to directly influence the 2021 Amendments as they were developed before the creation of the UKEB. The 2021 Amendments were finalised and published by the IASB after EU exit and were subject to public consultation. The UKEB Secretariat’s research indicated that comments from UK stakeholders were submitted directly to the IASB and/or to the European Financial Reporting Advisory Group (EFRAG) and were considered by the IASB when finalising those amendments.
UKEB Endorsement Criteria Assessment
On 4 July 2022 the UKEB published a [draft] UK Endorsement Criteria Assessment (DECA) on the set of the three narrow-scope amendments (IAS 1, IAS 8 and IAS 12).
The public consultation period closed on 3 October 2022. Thank you to all stakeholders that provided feedback.
All responses received were considered when finalising the ECA. The UKEB Final ECA was published on 2 December 2022. An accompanying Feedback Statement, describing how feedback received from stakeholders was addressed, was also published on the same date.
The following relevant documents are available at the foot of this page:
- Draft ECA and Invitation to Comment
- Responses from stakeholders
- Final ECA
- Feedback Statement
UKEB meetings
2021 Amendments-related topics were discussed in the following UKEB meetings.
- 19 May 2022: Endorsement of 2021 NSA—Approval of Project Initiation Plan
- 23 June 2022: Endorsement of 2021 NSA—Approval of Draft Endorsement Criteria Assessment
- 17 November 2022: Endorsement of 2021 NSA—Adoption Package
- 14 December 2022: Endorsement of 2021 NSA—Due Process Compliance (for noting)
Amendments description
A description of each Amendment is presented below.
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
Background
The Amendments to IAS 1 Disclosure of Accounting Policies and IFRS Practice Statement 2 were published by the IASB on 12 February 2021.
The Amendments to IAS 1:
- Amend paragraphs 117–122 of IAS 1 to require entities to disclose their material accounting policy information rather than their significant accounting policies.
- Indicate that accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence the decisions of primary users about the entity.
To support this amendment the IASB also amended IFRS Practice Statement 2 Making Materiality Judgements (Materiality Practice Statement) to explain and demonstrate the application of the ‘four-step materiality process’ to accounting policy disclosures. An IFRS Practice Statement is non-mandatory guidance[1]. The endorsement and adoption process applies only to the mandatory sections of standards that, if adopted, will become “UK-adopted international accounting standards”.
These amendments are effective for annual periods beginning on or after 1 January 2023, with early application permitted.
[1] Mandatory pronouncements are IFRS Standards, IAS Standards, Interpretations and mandatory application guidance. Non-mandatory guidance includes basis for conclusions, dissenting opinions, implementation guidance and illustrative examples, together with the IFRS practice statements. This categorisation is set out in the Introduction to the IASB yearly Bound Volumes.
Definition of Accounting Estimates (Amendments to IAS 8)
Background
The Amendments to IAS 8 Definition of Accounting Estimates were published by the IASB on 12 February 2021.
The Amendments to IAS 8:
- Introduce a definition of ‘accounting estimates’ which is anchored in the concept of ‘measurement uncertainty’ in the IASB’s Conceptual Framework; and
- Include other amendments to IAS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates.
These Amendments are effective for annual periods beginning on or after 1 January 2023, with early application permitted.
Deferred Taxes related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
Background
The Amendments to IAS 12 Deferred Taxes related to Assets and Liabilities arising from a Single Transaction were published by the IASB on 7 May 2021.
The Amendments to IAS 12 narrow the scope of the initial recognition exemption in paragraphs 15 and 24 of IAS 12 so that this exemption does not apply to transactions that, on initial recognition, give rise to equal and offsetting amounts of taxable and deductible temporary differences. These amendments result in entities recognising deferred taxes by applying the general requirements in IAS 12.
These Amendments are effective for annual periods beginning on or after 1 January 2023, with early application permitted.