The Saudi Organization for Chartered and Professional Accountants (SOCPA) recently shared its response to proposed amendments to International Financial Reporting Standard 3 (IFRS 3) and International Accounting Standard 36 (IAS 36). These amendments, published by the International Accounting Standards Board (IASB), address disclosures, goodwill, and impairment testing.

After a detailed review by its Accounting Standards Board, SOCPA expressed support for the proposed disclosures on strategic business combinations but advised reconsidering exemptions, which could lead to inconsistent applications among entities. Additionally, SOCPA suggested expanding the qualitative characteristics used to define strategic business combinations.

Regarding goodwill and impairment testing, SOCPA found the proposed adjustments on allocating goodwill to cash-generating units and disclosing segments that contain these units to be appropriate. However, SOCPA noted concerns about allowing future cash flows related to uncommitted restructuring efforts to be included in calculating value in use for impairment testing, warning that this might lead to overly optimistic management expectations about assets and delay impairment recognition.

 

SOCPA’s detailed feedback can be viewed by clicking here.