If you didn’t already know, the IFRS IC is the IFRS standards Interpretations Committee. This body is in charge of explaining how to read IFRS standards and how to interpret the IASB’s thinking. The IFRS IC can, in some cases, propose the modification of some of the standards’ stipulations when they are judged to be unclear.
The members of the Interpretations Committee meat every two months to address a wide array of issues. While these issues may seem very narrow at first, practically speaking, there’s always a risk that they could impact other similar transactions. For example, recent issues discussed at the IFRS IC include onerous contracts, debt modification, how to apply IFRS 15 to different kinds of real estate development, what instruments can be designated at fair value for OCI, how to handle tax-related interest and penalties…the list goes on. The nearly simultaneous implementation of three major new standards (IFRS 15, IFRS 9 and IFRS 16) has created an ideal situation for the IFRS IC to expand its activities.
Often, the Committee’s conclusions do not come in the form of an IFRSIC opinion, but rather an agenda decision (rejection) is published, stating that the standard is clear and does not require modification. These rejections are often accompanied by a textual explanation of how the standard should be read. While these rejections have no official authority in IFRS literature, it is practically impossible to get around them. Ironically, if a Group changes their accounting methods after such a rejection is published, this change is considered to be a voluntary change of methods (or even an error correction).
We therefore encourage you to follow the issues before the Interpretations Committee closely, including the publication of any rejections.
As part of our standards monitoring, we publish a list of issues addressed by the IFRS IC every two months. If you have any questions about possible impacts on your accounts, please contact our IFRS teams.