The International Accounting Standards Board (IASB) has tentatively proposed amendments to its International Financial Reporting Standards (IFRS) in an Exposure Draft (ED).
In its discussions regarding primary financial statements, IASB stipulated that an organisation must be required to disclose how it calculated the income tax effect of management performance measure adjustments.
In addition, IASB decided to update the model’s scope to be applicable to defined rate regulation, as well as to update the definitions of regulatory assets (the ability to add an amount to the charged rate) and regulatory liabilities (obligations to deduct an amount from the charged rate).
In discussions around a proposed updated analysis of the model’s measurements, the board tentatively decided that an entity must implement the cash-flow-based measurement practice for all regulatory assets and regulatory liabilities, unless they relate to expenses or income.
It was agreed that the model would take an “indicator-based approach” when assessing regulatory interest and return rates as adequate for compensation.
Furthermore, IASB proposed deferral of IFRS 17 implementation by one year, to 1 January 2022.
Kamran Foroughi, senior director at Willis Towers Watson, commented: “We are helping clients across the globe with IFRS 17 implementation. In our experience, insurers are focusing on solving operational and technology implementation challenges, which are largely unaffected by the ED.”
He added: “As well as considering the ED proposals, we believe firms should continue with implementation projects to address these challenges.”
