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EFRAG Research Project on Non-Exchange Transfers



During the IASB Agenda consultation, some constituents suggested to add a project on non-reciprocal transactions, including with Governments.

These respondents identified several different transactions, including income taxes, levies, pollutant pricing mechanisms and government grants as examples of transactions in which the non-reciprocal nature of the transactions contributed to the difficulties in accounting for them. The IASB eventually decided that the accounting issues around these transactions are not related to their non-reciprocal nature.

EFRAG considered that the discussions around the endorsement of IFRIC 21 Levies suggested that the application of the definition of assets and liabilities may not result in the most relevant information for some types of transactions with specific characteristics.

What is the objective of the project?     

The objective of the project is to consider whether the characteristics of certain transfers may justify a different accounting approach.

For the purposes of the research, non-exchange transfers  (NETs) are defined as transfers where an entity either receives value from another party (or gives value to it) without directly giving (receiving) approximately equal value in exchange.

The scope of the research excludes transfers between entities and their majority shareholders in their capacity, or rate-regulated activities (which are part of a separate research project by the IASB).

The research focuses on the timing and pattern of recognition and does not address measurement issues. These may be considered at a future development of the research project.
For transfers within the proposed definition, the DP suggests an accounting model based on the following principles:

  • Transfers that contain performance-related conditions imposed on the resource recipient are recognised when (or as) the performance-related conditions are being satisfied.
  • Transfers that do not contain performance-related conditions but arise as a consequence of an identifiable activity (or a set activities are recognised when the underlying activity is performed. 
  • For transfers that cannot be anchored to an underlying performance-related condition or to an underlying activity of the parties, the model considers that the notion of 'societal benefit'  can play a significant role for accounting purposes. As it is not generally possible to identify specific patterns in which entities receive and consume the benefits of the general activity of the Government or contribute to them, it seems reasonable that many of these are rendered continuously.

On 27 November 2018, EFRAG issued its discussion paper which requested comments until 30 April 2019.

Following the consultation, EFRAG received 13 comments letter. On 10 July 2019, EFRAG published a feedback statement summarising the feedback received from constituents. The feedback statement can be found here.

Based on the feedback received no further activities will be conducted on this project at this stage.

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