In recent months I have introduced the US-born Mrs Deller to the joys of Grand Designs, a UK television programme that follows large-scale self-build projects and checks back in repeatedly as construction proceeds. It did not take her long to understand the general formula: the projects never run to time and are almost always overbudget. With that in mind, it is time for us to examine the progress made on the two grand designs outlined in the third agenda consultation of the International Accounting Standards Board (IASB), published in 2022.
The IASB holds an agenda consultation every five years, gathering feedback on what the direction should be over the next period, clarifying the current areas of focus but also investigating what new projects should be considered. Following the third agenda consultation, two major areas of research were added to the workplan: intangible assets and cashflow statements.
Intangibles
Intangible assets is probably the major area faced by the IASB. The limitations of the IAS standard (IAS 38, Intangible Assets) have been regularly discussed in this column, and the most recent update can be found in my Taylor Swift quote-fest.
Progress on such a large, contentious area will be slow, but the IASB does seem committed to developing this into a potential standard-setting project. It met in May 2025 and outlined two major objectives of the project and how the work would move forward in two streams.
The project considered a lot of issues raised by respondents before settling on what the key objectives would be. As a result, the two stated objectives are deliberately open enough to not commit the IASB to a particular purpose.
The two objectives of the intangibles project are:
- to improve the usefulness of information entities provide about intangible items in their financial statements
- to update IAS 38 – in particular, to make it more suitable for newer intangible items and new ways of using them.
Information
The first area of focus will be assessing user needs for information about recognised and unrecognised intangible assets and expenditure associated with them in the financial statements.
One of the issues around the accounting for intangible assets is that stakeholder views vary quite substantially. Therefore the key initial part of this assessment will be asking users what information about intangible assets and associated expenditure they think is important, why they think this information is important (that is, what is the information used for) and where they currently get this information from.
In addition, users will be asked why they adjust information about intangible assets and associated expenditure in the financial statements, and what they find unhelpful about the information currently provided in the financial statements.
Definitions
The second area of work will involve considering whether to update the definition of an intangible asset, associated guidance and some aspects of the recognition criteria. This will be done by initially using, as test cases, application issues related to newer types of intangible asset and new ways of using them.
From there the IASB will consider the effects of any potential amendments on the broader population of intangible assets.
The first test cases identified for this are application issues related to cloud computing and agile software development, which are those most commonly mentioned. Research will also be done over the areas of data resource and AI to assess whether they would be good to use as further test cases.
Cashflow statements
To many people, the cashflow project is less exciting, and it does seem less developed than the intangible assets project. The IASB has decided on some ways forward, noting particularly that it will assess potential ways to improve:
- the disaggregation of cashflow information in the financial statements
- the reporting of information about non-cash transactions in the financial statements
- the transparency of information communicated about cashflow measures not specified in IFRS Accounting Standards
- the consistent application of requirements to classify cashflows as operating, investing or financing
- the consistent application of the definition of ‘cash equivalents’.
This all seems eminently sensible, but the current progress on this project is almost as much about what routes forward have been rejected. The decision has been made not to redefine the operating, investing or financing categories or to align them with the profit or loss classifications used in IFRS 18, Presentation and Disclosure in Financial Statements.
Other major areas that won’t be developed further are to define the ‘free cashflow’ measure or develop new requirements for cashflow information by segment. Work to improve the statement of cashflows for financial institutions is still under consideration, but this will be revisited later in the project.
Timeline
The work on both areas will move towards consultation with a variety of advisory boards and stakeholders in late 2025. This feedback will be presented to the IASB in 2026, with potential solutions outlined for test cases then. Beyond that, the timeline is open.
Now that these timelines are set, let’s see what happens when we make our return visit next year. In the meantime, the fourth agenda consultation will be launched in late 2025 with a request for information.
More information
See Peter Reilly’s opinion column in AB on the standard-setting agenda, and Adam Deller’s explainer videos on IFRS Accounting Standards, including IAS 38
