March 2025

Hey everyone,

If you don’t have a paid subscription to IFRS.org, good news — the IFRS Foundation has released the 2025 set of IFRS. That means IFRS 18 and IFRS 19 are available for free. In this issue, we’ll also take a closer look at the IFRS Interpretations Committee’s agenda decision on guarantees issued for obligations of other entities. And more!

Let’s dive in.

IFRS 2025 released

The IFRS Foundation has published the 2025 edition of the ​IFRS Accounting Standards​, previously known simply as “IFRS” 😉 You’ll need to create a free account if you don’t already have one.

Technical Publications

Impact of new import tariffs

With global trade tensions rising, KPMG has released a brief overview of the ​implications for impairment testing under IAS 36​. No revolutionary insights here, but it might come in handy if your CFO casually asks about tariff impacts over lunch or at the water cooler 😉

Going concern

The FRC has updated its guidance on the ​going concern basis of accounting​ and related disclosures. It integrates IFRS, UK GAAP, and UK company law, so it’s particularly relevant for UK entities. That said, the core principles are broadly applicable and the publication is practical and scenario-based — covering scenarios like a subsidiary depending on parent support, or a company heavily reliant on a single customer.

IFRS Interpretations Committee Meeting

The Committee met on 11 March 2025. While no new agenda decisions were issued, they discussed a tentative one issued back in September 2024 that’s worth a closer look.

The agenda decision, expected to be finalised in April (pending IASB approval), deals with guarantees issued for the obligations of other entities. Outside the financial sector, such guarantees are common in intra-group arrangements, for example, where a parent guarantees a subsidiary’s performance obligations. Similar issues arise in consolidated accounts when a parent backs a joint venture or other non-consolidated investee.

In practice, these guarantees are (too) often accounted for under IAS 37 as contingent liabilities or provisions. But many of them are actually financial instruments if you think about it. The challenge is determining whether they qualify as derivatives or loan commitments.

The agenda decision provides a helpful framework, though it falls short in a few key areas, particularly in distinguishing between loan commitments and derivatives, and in clarifying when IAS 37 actually applies.

Here’s my summary of the accounting framework:

  1. Start with the definition of a financial guarantee contract. Does the arrangement require specific payments to compensate for credit losses arising from a debtor’s failure to pay on time? Is there an underlying debt instrument? If so, it’s a financial guarantee contract accounted for under IFRS 9.4.2.1(c).
  2. If it’s not a financial guarantee, consider whether it’s an insurance contract. If it meets the definition, IFRS 17 applies (unless specifically scoped out). Deloitte’s publication on ​IFRS 17 for non-insurers​ offers helpful guidance here.
  3. If it’s neither of the above, you’re likely dealing with either a derivative or a loan commitment. This is where the IFRS Staff analysis feels a bit thin — it doesn’t clearly explain how to distinguish the two. PwC’s view (see section 2.4.b ​Performance guarantee contracts​) is that performance guarantees not meeting the insurance definition are generally loan commitments.
  4. Finally, if the arrangement doesn’t meet the definition of a financial instrument, IAS 37 applies. I’ve come up with two examples where this might be the case:
    • The guarantee isn’t contractual — for example, it’s made through a public statement or is legally required.
    • It is contractual, but the obligation doesn’t involve transferring cash or financial assets (e.g. the guarantor steps in to perform work, such as repairs or completing a project).

Here are the IFRS staff papers supporting the agenda decision:

Let me know your thoughts! Feel free to reply to this email or join the discussion on this ​IFRS Community thread​.

Work in Progress at the IASB

The IASB met on 18-20 March. No major developments this time, so keep reading 🙂

Miscellany

IFRS Foundation’s 2024 annual report

The IFRS Foundation has released its ​2024 annual report​. Expanding into sustainability reporting pushed them into the red last year — but they remain a going concern 😉

That’s all for this edition of Reporting Period. Your feedback is invaluable, so feel free to reply directly to this email with any thoughts and comments.

Thanks for reading!
Marek