IASB completes two new standards

The International Accounting Standards Board announced that it has completed its decision-making on two projects — one to improve the financial performance information companies report, and one to simplify the financial statements prepared by subsidiaries of listed groups.

The next steps for the projects is to go to the drafting and balloting stages. The board expects to issue the new standards in the first half of 2024, with an effective date for reporting periods on or after Jan. 1, 2024.

The first new standard aims to have companies report more consistently and transparently, so it's easier for investors to compare them. Refined from a 2019 proposal, it is expected to supersede IAS 1, "Presentation of Financial Statements."

The second standard aims to reduce the disclosures required of subsidiaries that are not traded in markets, or hold assets entrusted to them by customers.

Separately, the board released amendments to IAS 21, "The Effects of Changes in Foreign Exchange Rates," that will require companies to report more information when a currency in a financial statement cannot be exchanged into another currency.

Stakeholder feedback had suggested wide diversity in how companies handle a lack of exchangeability, a topic that had not been addressed in previous standards.

"These amendments fill a gap in our accounting standards," said the vice chair of the IASB, Linda Mezon-Hutter, in a statement. "Diverse view on assessing whether a currency can be exchanged into another currency, and the exchange rate to use when it cannot, could lead to material differences in companies' financial statements. The amendments will improve the usefulness of information provided to investors."

The amendments will be effective for reporting periods after Jan. 1, 2025, but early application is allowed.

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