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10 June 2015

Deloitte commented on the classification of liabilities


Deloitte has published its comment letter to the IASB on proposed amendments to IAS 1, ED/2015/1 'Classification of Liabilities'. Deloitte believes that the IASB should consider this issue more fully as part of the Disclosure initiative.

Deloitte welcomes the IASB’s initiative in addressing an area of accounting which often presents issues in practice and recognise that many of the amendments proposed would be beneficial. However, Deloitte believes that the Board should consider this conceptual issue more fully as part of its Disclosure Initiative project rather than proceeding with the very limited amendments proposed in the ED.

Deloitte is concerned that the amendments do not address many of the practical issues that arise in respect of, for example, loan covenants and refinancing transactions. In addition, Deloitte notes that the amendments appear to introduce an inconsistency in the treatment of liabilities settled by the transfer of equity instruments to the counterparty.

Deloitte recommend that the Board provide guidance on these practical issues and, more broadly, note that many of them result from the mixed model applied by IAS 1 and the lack of a clear principle or disclosure objective underpinning the classification of liabilities as current or non-current. This also makes the resulting information less meaningful for users of financial statements. 

Full comment letter



© Deloitte LLP


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