IAASA Information Note: IAS 36 Impairment of Assets – information requests from IAASA

Mar 30, 2021

IAASA has published an Information Note: IAS 36 Impairment of Assets – information requests from IAASA.

IAASA notes that the primary purpose of this Information Note is to provide preparers, auditors and users of financial statements with information to encourage discussion and stimulate debate as to whether or not issuers have adequately considered the requirements of IAS 36, and that, with the aim of achieving this primary purpose, IAASA is publishing a selection of the IAS 36 information requests that it has made to issuers during recent financial statement examinations.

In setting out the ‘Key Message,’ the Information Note says:

The objective of IAS 36 is to prescribe the procedures that an entity applies to ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset. If this is the case, the asset is described as impaired and IAS 36 requires the entity to recognise an impairment loss.

Given the economic uncertainty caused by COVID-19, IAASA expects that issuers will incorporate higher levels of uncertainty in their impairment testing assumptions. In these circumstances, issuers should recognise the importance to users of financial reports of high quality disclosures regarding impairment reviews.

To assist issuers in providing useful impairment disclosures, IAASA is publishing this Information Note. This Information Note lists the impairment review information requests that IAASA has made to issuers during previous financial statement examinations. Consideration by issuers as to how they might respond to such questioning may assist issuers in providing high quality information to users of their financial reports.’

The Information sheet refers to IAS 36 requirements, summarises the outcome of IAASA’s engagement with some issuers regarding their IAS 36 disclosures, and sets out a non-exhaustive list of information requests that IAASA asked of issuers to understand issuers’ rationale for their impairment disclosures.

In ‘Conclusion’ the Information Note says:

IAASA continues to focus on and engage with issuers in relation to the application of IAS 36 Impairment of Assets.

It is IAASA’s expectation that management, boards and audit committees will carefully assess and consider the information requests outlined in this document when determining the financial reporting treatment of impairments – including recognition, measurement, presentation and disclosures – in future financial reports.’

The Information Note is available here.’