Tentative decisions

Financial Instruments with Characteristics of Equity — The IASB tentatively decided to proceed with proposed amendments to IAS 32 on reclassification of financial liabilities and equity instruments, with targeted refinements clarifying when changes in contractual substance trigger reclassification and defining "circumstances external to the contractual arrangement" (9 of 12 members agreed).

Financial Instruments with Characteristics of Equity (Shareholder Discretion) — The IASB tentatively decided to proceed with the factors-based approach for assessing whether shareholder decisions are treated as entity decisions at initial recognition, with clarification of underlying principles including contractual terms, facts and circumstances, shareholder capacity, factor weightings, and interactions between multiple decision-making rights (unanimous, 12 of 12 members).

Amortised Cost Measurement — The IASB tentatively decided to take no further action on clarifying how entities determine effective interest rate under IFRS 9 when contractual terms contain conditions affecting the interest rate (unanimous, 12 of 12 members).

Equity Method — The IASB decided to add to project scope the application question on recognition of acquisition-related costs when applying the equity method (unanimous, 12 of 12 members), and decided to explore relief from the Exposure Draft proposal regarding investors purchasing additional interests while retaining significant influence (unanimous, 12 of 12 members).

Statement of Cash Flows and Related Matters — The IASB tentatively decided to develop potential requirements strengthening the link between the statement of cash flows and other financial statement information under IFRS Standards, and to improve consistency of cash flow presentation from discontinued operations (unanimous, 12 of 12 members).

Active projects

Financial Instruments with Characteristics of Equity — Redeliberating classification topics in the Exposure Draft; continued board discussions expected on remaining technical matters before finalisation.

Amortised Cost Measurement — Deliberating issues within project scope; staff will continue assessing potential alternatives to clarifying requirements on subsequent changes to effective interest rate under IFRS 9.

Equity Method — Redeliberating Exposure Draft proposals on IAS 28; board will explore relief provisions for additional interest purchases and clarification of fair value option criteria in paragraphs 18–19.

Business Combinations—Disclosures, Goodwill and Impairment — Continuing redeliberation of Exposure Draft feedback, particularly on performance and expected synergy information disclosures.

Statement of Cash Flows and Related Matters — Continuing assessment of potential improvements to cash flow disaggregation, linkage to other IFRS Standards, and discontinued operations presentation.

Provisions—Targeted Improvements — Redeliberating Exposure Draft proposals on discount rate requirements and other targeted improvements to IAS 37.

What it means for preparers

• Monitor Financial Instruments changes closely: The shareholder discretion decision clarifies a judgment-intensive factors-based approach requiring entities to assess contractual terms, facts, circumstances, and shareholder capacity holistically. Finance teams should begin documenting their classification methodologies and prepare to justify factor weightings and interactions between decision-making rights during audit discussions.

• No relief expected on EIR calculations: The IASB's decision to take no further action on conditional interest rate terms means existing IFRS 9 EIR guidance stands; entities holding instruments with interest rate conditions should confirm current estimation methods comply with current standards rather than awaiting clarification.

• Anticipate equity method guidance expansion: The addition of acquisition-related costs and exploration of relief provisions for additional interest purchases suggests final guidance will address common practical scenarios. Preparers applying the equity method should track redeliberations closely, particularly if currently applying the ED's approach to additional purchases.

• Cash flow presentation standards tightening: Proposals to strengthen links between the cash flow statement and other IFRS disclosures (e.g., segment reporting, lease disclosures) and improve discontinued operations presentation indicate enhanced reconciliation and traceability requirements are coming; finance teams should audit current cash flow system architectures for capability to meet future linking requirements.

Standards in scope

• IAS 32 Financial Instruments: Presentation
• IFRS 9 Financial Instruments
• IAS 28 Investments in Associates and Joint Ventures
• IFRS 3 Business Combinations
• IAS 7 Statement of Cash Flows
• IAS 37 Provisions, Contingent Liabilities and Contingent Assets