14 November 2024To:
Members of the Hong Kong Institute of CPAsAll other interested partiesINVITATION TO COMMENT ON THE IASB EXPOSURE DRAFTProvisions—Targeted ImprovementsProposed amendments to IAS 37Comments to be received by 28 January 2025The Financial Reporting Standards Committee (FRSC) of the Hong Kong Institute of CertifiedPublic Accountants (Institute) is seeking comments on the International Accounting StandardsBoard (IASB) Exposure Draft Provisions—Targeted Improvements—Proposed amendments toIAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Exposure Draft is availableon the Institute's website:
https://www.hkicpa.org.hk/en/Standards-setting/Standards/Open-for-comment-documents/fredIn response to investors’ needs for transparent and comparable information about companies’provisions for assessing future cash flows and financial positions, the IASB is proposing targetedimprovements to IAS 37, aimed at improving the requirements for recognising and measuringprovisions on companies’ balance sheets. Provisions are liabilities for uncertain timing or amount.Key proposals in the Exposure DraftThe IASB is proposing the following targeted improvements to IAS 37:
•updating the definition of a liability in IAS 37 and the wording of the present obligationrecognition criterion to align them with the definition of a liability in the ConceptualFramework for Financial Reporting;
•amending the requirements supporting the present obligation recognition criterion, drawingon concepts from the Conceptual Framework for Financial Reporting;
•specifying that the discount rate used in measuring a provision excludes non-performancerisk and adding relevant disclosure requirements; and•clarifying that the types of costs an entity includes in measuring a provision are the same asthose it uses to determine whether a contract is onerous.Impact on entities in Hong KongThe proposals regarding the present obligation recognition criterion would have widespreadapplicability as they impact whether and when to recognise all types of provisions. Entities subjectto levies and similar government-imposed charges are likely to be most significantly affected.Additionally, the proposals concerning the discount rate would impact entities with provisionsdiscounted to reflect the effect of the time value of money. Entities with large long-term assetdecommissioning or environmental rehabilitation provisions, typically those operating in the energygeneration, oil and gas, mining and telecommunications sectors, would be most likely affected.The FRSC invites your comments on the Exposure Draft by 28 January 2025 to allow yourcomments to be considered in developing its response to the IASB. Comments should besupported by specific reasoning and should be submitted in written form.Comments may be sent by mail, fax or e-mail to:
Standard Setting DepartmentHong Kong Institute of Certified Public Accountants37th Floor, Wu Chung House213 Queen’s Road EastWanchai, Hong KongFax number (+852) 2865 6603E-mail: commentletters@hkicpa.org.hkComments will be acknowledged and may be made available for public review unless otherwiserequested by the respondent.
Invitation to Comment on IASB Exposure Draft Provisions—Targeted Improvements—Proposed amendments to IAS 37
下载原件14 November 2024To:
Members of the Hong Kong Institute of CPAsAll other interested partiesINVITATION TO COMMENT ON THE IASB EXPOSURE DRAFTProvisions—Targeted ImprovementsProposed amendments to IAS 37Comments to be received by 28 January 2025The Financial Reporting Standards Committee (FRSC) of the Hong Kong Institute of CertifiedPublic Accountants (Institute) is seeking comments on the International Accounting StandardsBoard (IASB) Exposure Draft Provisions—Targeted Improvements—Proposed amendments toIAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Exposure Draft is availableon the Institute's website:
https://www.hkicpa.org.hk/en/Standards-setting/Standards/Open-for-comment-documents/fredIn response to investors’ needs for transparent and comparable information about companies’provisions for assessing future cash flows and financial positions, the IASB is proposing targetedimprovements to IAS 37, aimed at improving the requirements for recognising and measuringprovisions on companies’ balance sheets. Provisions are liabilities for uncertain timing or amount.Key proposals in the Exposure DraftThe IASB is proposing the following targeted improvements to IAS 37:
•updating the definition of a liability in IAS 37 and the wording of the present obligationrecognition criterion to align them with the definition of a liability in the ConceptualFramework for Financial Reporting;
•amending the requirements supporting the present obligation recognition criterion, drawingon concepts from the Conceptual Framework for Financial Reporting;
•specifying that the discount rate used in measuring a provision excludes non-performancerisk and adding relevant disclosure requirements; and•clarifying that the types of costs an entity includes in measuring a provision are the same asthose it uses to determine whether a contract is onerous.Impact on entities in Hong KongThe proposals regarding the present obligation recognition criterion would have widespreadapplicability as they impact whether and when to recognise all types of provisions. Entities subjectto levies and similar government-imposed charges are likely to be most significantly affected.Additionally, the proposals concerning the discount rate would impact entities with provisionsdiscounted to reflect the effect of the time value of money. Entities with large long-term assetdecommissioning or environmental rehabilitation provisions, typically those operating in the energygeneration, oil and gas, mining and telecommunications sectors, would be most likely affected.The FRSC invites your comments on the Exposure Draft by 28 January 2025 to allow yourcomments to be considered in developing its response to the IASB. Comments should besupported by specific reasoning and should be submitted in written form.Comments may be sent by mail, fax or e-mail to:
Standard Setting DepartmentHong Kong Institute of Certified Public Accountants37th Floor, Wu Chung House213 Queen’s Road EastWanchai, Hong KongFax number (+852) 2865 6603E-mail: commentletters@hkicpa.org.hkComments will be acknowledged and may be made available for public review unless otherwiserequested by the respondent.