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Nevertheless, the IASB continues to maintain existing standards, while also conducting standard-setting and research activities, as evidenced by the current ongoing projects: the possible extension of the period covered by the IFRS 16 amendment on COVID-19 related rent concessions, the publication of an exposure draft on the recognition of regulatory assets and liabilities, and the issue of a discussion paper on business combinations under common control.
Furthermore, in the context of the current crisis, many entities have seen a downturn in their revenue, profitability, and hence liquidity which may raise questions to a greater or lesser extent about their ability to continue as a going concern. Deciding whether financial statements should be prepared on a going concern basis may therefore involve a greater degree of judgement than usual.
For this reason, on 13 January, the IFRS Foundation issued an educational material entitled Going concern – a focus on disclosure to support entities in the application of IFRS standards (in particular, IAS 1 and IAS 10) when preparing their financial statements on a going concern basis. Three scenarios are presented when an entity ultimately concludes that it should prepare its financial statements on a going concern basis:
- Scenario 1: no significant doubts;
- Scenario 2: significant doubts about going concern, but no material uncertainties remaining;
- Scenario 3: significant doubts about going concern, with material uncertainties remaining after analysis of mitigating actions.
At the European level, we would like to remind you that on 14 January, the amendments to IAS 39, IFRS 9, IFRS 7, IFRS 16, and IFRS 4 arising from Phase 2 of the IBOR reform project were published in the Official Journal of the European Union (OJEU). These amendments are mandatory for financial periods commencing on or after 1 January 2021. Early application is permitted. Publication of these amendments in the OJEU therefore opens the way to early application in the EU for the 2020 reporting period.
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