IASB launches comprehensive review of accounting for intangibles

The International Accounting Standards Board (IASB) is commencing its comprehensive review of accounting requirements for intangibles .

The project will assess whether the requirements of IAS 38 Intangible Assets remain relevant and continue to fairly reflect current business models or whether the IASB should improve the requirements.

During the IASB’s Third Agenda Consultation , stakeholders identified this as a high priority project. This week’s IASB meeting signifies the start of the board’s work on this project, meeting the IASB’s commitment to its stakeholders.

The initial research and planning phase aims to define the scope of issues to be explored in the project and explore the best approach to plan and organise the work.

Over the next few months, the IASB will be consulting with its advisory bodies and other stakeholders to help inform the project plan. This will be discussed at a future public meeting.

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In the Third Agenda Consultation, stakeholders highlighted deficiencies in the reporting of intangible assets. Respondents raised matters relating to all aspects of IAS 38 Intangible Assets, including its scope, its recognition and measurement requirements (including the difference in the accounting for acquired and internally generated intangible assets), and the adequacy of the information companies are required to disclose about intangible assets.

In response to that feedback, the IASB has started a project to comprehensively review the accounting requirements for intangibles. The project will assess whether the requirements of IAS 38 remain relevant and continue to fairly reflect current business models or whether the IASB should improve the requirements.

The IASB acknowledges that a comprehensive review of IAS 38 will be a large and complex project for the IASB and its stakeholders. Initial research will seek to define the scope of the project and explore how best to stage work on this topic to produce timely improvements to IFRS Accounting Standards.

Although the title of this project refers to intangible assets, the IASB will also consider whether the project should be limited to accounting for and disclosing information about financial statement elements—assets and expenses arising from expenditure on intangible items—or whether the project should aim to address intangible items more broadly.

The IASB will also need to consider the connections between this project and the work of the International Sustainability Standards Board (ISSB). For example, the IASB will consider connections with some information that IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information requires companies to disclose and consider connections with the ISSB’s forthcoming research project on human capital.