IAS 28 Balloting Begins, IFRS 9 Hedge Accounting RFI Approved

Equity Method (IAS 28) — Board Begins Balloting the Revised Standard

The clearest milestone to come out of the September meeting: the IASB decided to begin the balloting process for the revised IAS 28 Investments in Associates and Joint Ventures, moving the long-running Equity Method project from redeliberation into the formal issuance pipeline. All 12 Board members confirmed they were satisfied that due process requirements have been met and that sufficient consultation and analysis has been undertaken — but one member indicated an intention to dissent from issuing the revised Standard, so this is not yet a unanimous outcome.

Before reaching that point, the Board closed out several remaining threads:

• IAS 27 separate financial statements: withdrew the Exposure Draft proposal that would have required a parent to disclose gains or losses from "downstream" transactions with subsidiaries accounted for using the equity method, replacing it with a requirement to disclose the accounting policy for recognising such gains or losses — and decided not to add any further IAS 27 disclosure requirements (all 12 agreed).
• Sweep issues: retained the Exposure Draft's position that equity method procedures are largely similar to the consolidation procedures in IFRS 10; confirmed that an investor applying the undue cost or effort exemption on transition may assess gains and losses either collectively or individually, and must apply its new accounting policy prospectively after the transition date (all 12 agreed).
• IFRS 19 subsidiaries without public accountability: settled a long list of disclosure sub-decisions for eligible subsidiaries applying IFRS 19, including a requirement to disclose the accounting policy for recognising gains or losses from transactions with associates and joint ventures (all 12 agreed), and — where a subsidiary restricts recognition of such gains or losses — the restricted amount and its location in the statement of financial position (all 12 agreed). Several narrower disclosure items were explicitly declined, including a reconciliation of restricted gains and losses (11 of 12) and disclosure of the specific line items where restricted amounts sit (11 of 12).
• Effective date: the revised IAS 28 would apply to annual reporting periods beginning on or after 1 January 2029, with early application permitted (and requiring disclosure if used) — on the premise that the Standard itself is issued in the first half of 2027 (9 of 12 agreed).

Post-implementation Review of IFRS 9 — Hedge Accounting Request for Information Approved

As flagged back in July, the IASB confirmed it would publish a Request for Information on the Post-implementation Review of IFRS 9 hedge accounting requirements this month. At the September meeting, all 12 members approved the RFI for public comment and set a 120-day comment period. This gives preparers and users of financial statements with material hedging programmes a formal channel to flag whether the current hedge accounting model — and its interaction with IFRS 7 disclosure requirements — is delivering decision-useful information at a reasonable cost.

Statement of Cash Flows — Classifying Acquisition-Related Payments

The Board tentatively decided to amend paragraph 39 of IAS 7 so that "cash flows arising from obtaining or losing control" of a subsidiary include only payments of items within "consideration transferred" as defined in paragraph 37 of IFRS 3. The practical effect, once finalised:

• Payments of deferred and contingent consideration arising from a business combination would be classified as investing activities (8 of 12 agreed).
• Payments of the acquiree's pre-existing debt would be classified as financing activities (11 of 12 agreed).
• Payments of transaction costs would be classified as operating activities (all 12 agreed).

Separately, the Board tentatively decided to introduce a new IAS 7 disclosure objective covering specified non-cash changes in assets and liabilities — linking the amounts in an indirect-method reconciliation back to the corresponding line items in the statement of financial position (9 of 12 agreed), to be met via a table disaggregating non-cash changes from foreign currency translation, obtaining or losing control of subsidiaries, and reclassification (9-10 of 12 agreed across the sub-decisions). The Board declined to carve out any general exemption from this disclosure beyond the specified items (9 of 12).

Other Decisions — FICE, Amortised Cost, Intangible Assets, IFRS 18 Tax Presentation, IAS 37

• Financial Instruments with Characteristics of Equity (IAS 32 / IFRS 18): continued redeliberating obligations to purchase own equity instruments. Tentatively decided the debit entry on initial recognition (subject to refinements on non-controlling interest access-to-returns, 9 of 12), that remeasurement gains or losses go through profit or loss (12 of 12), and that on expiry of a written put option over non-controlling interest, an entity recognises in profit or loss the difference between the financial liability's carrying amount and the initial amount by which non-controlling interest was reduced (11 of 12). No decision yet on measurement of the financial liability itself.
• Amortised Cost Measurement (IFRS 9): clarified that the 10-per-cent test considers all contractual terms, with options or contingent terms assessed as exercised at the earliest possible date regardless of probability (9 of 12), and that revolving credit facilities are tested using the maximum credit capacity over the remaining term (12 of 12). Tentatively decided to require an adjustment to the effective interest rate — reflecting a change in contractual interest rate for time value of money or credit risk — when a modification not resulting in derecognition changes those terms (11 of 12), and clarified what counts as "costs or fees incurred" on a non-derecognising modification (12 of 12).
• Intangible Assets (IAS 38): continued developing a model for customer accounting for intellectual property licensing contracts, using a cloud-based Software-as-a-Service arrangement as a test case. No decisions were made.
• Business Combinations — Disclosures, Goodwill and Impairment: discussed what information to require about the subsequent performance of a business combination. No decisions were made.
• IFRS 18 / IAS 12 — Non-Income Tax Presentation: tentatively decided to amend IFRS 19 so eligible subsidiaries applying it and classifying substitute tax charges within the income taxes category must disclose the nature, amount and calculation basis of those charges (12 of 12), applied retrospectively under IAS 8 with no first-time-adopter exemption (12 of 12). The Exposure Draft will carry a 120-day comment period; two members indicated an intention to dissent. Publication is expected in Q4 2026.
• Provisions — Targeted Improvements (IAS 37): relocated a supporting requirement (originally proposed paragraph 14R) from the past-event condition to the obligation condition following the earlier decision to omit paragraph 14Q (12 of 12); made no changes to the threshold-triggered-costs proposals; retained the scope exclusion for executory contracts while aligning the definition with the Conceptual Framework (12 of 12 on both).

Why It Matters

The IAS 28 balloting decision is the one to watch most closely: once a Standard moves to balloting, finalisation typically follows within months, and entities with associates, joint ventures or subsidiaries held under the equity method should start evaluating the new policy choice for recognising transaction gains and losses — in both consolidated and now separate financial statements — well before the proposed 1 January 2029 effective date. For anyone running material hedge programmes, the IFRS 9 hedge accounting RFI is a genuine opportunity to shape the Board's thinking during its 120-day comment window, rather than reacting to a finished Exposure Draft later. And the IAS 7 acquisition-payment classification guidance, while still tentative, gives preparers a clearer signal on where deferred consideration, pre-existing debt repayment and transaction costs should land in the cash flow statement — worth revisiting ahead of the next business combination your entity executes.