Perspectives by W.consulting (blog)

The IASB covered seven projects in July. One of them needs something from you.

tapiwa@wconsulting.co.za (Tapiwa Njikizana) — Mon, 14 Sep 2026 11:44:43 GMT

We read the full IASB Update so you don't have to — triaged into what needs action, what's worth watching, and what you can safely skip.

The IASB met on 21–22 July 2026 and covered eight projects, from post-implementation reviews to Exposure Draft redeliberations. Most of it doesn't need anything from you right now. One item does.

The triage

Topic	Status	Worth a closer read if...
Reverse factoring agenda decision withdrawn	Act now	...you have reverse factoring arrangements — see below
IFRS 18 — presentation of non-income tax charges	Watch	...you pay a tax that could be classified as a substitute for income tax
IFRS 16 — Post-implementation Review concluded	Watch	...you're a lessee tracking whether remeasurement/discount-rate relief is coming
Equity Method (IAS 28) redeliberations	Watch	...you're already tracking this Exposure Draft — it's nearing finalisation
Statement of Cash Flows — non-cash transactions	Watch	...you regularly have material non-cash investing/financing transactions
IFRS 9 — Hedge Accounting Post-implementation Review	No action needed	...you want to comment when the Request for Information opens in September 2026
Business Combinations — disclosures, Goodwill and Impairment	No action needed	...you want to track redeliberation progress
Intangible Assets	No action needed	no decisions were made

The one that matters: reverse factoring

If you have supply chain financing (reverse factoring) arrangements, the guidance you may have been relying on to work out your disclosures no longer exists. The IASB has withdrawn its December 2020 agenda decision on Reverse Factoring, following a recommendation from the IFRS Interpretations Committee. Eleven of the twelve Board members agreed.

That agenda decision was the main practical guidance on how reverse factoring arrangements should be presented and disclosed under IAS 7 and IAS 1. With it gone, your existing disclosure isn't automatically wrong — but it's no longer resting on an explicit, citable basis.

The question isn't whether your disclosure was right under the old guidance. It's whether it still stands without it.

Check before year-end. Does your reverse factoring disclosure reference the withdrawn 2020 agenda decision directly, in policy or in the audit file? If so, can it stand on its own — argued from IAS 7 and IAS 1's general requirements rather than guidance that's no longer there? Worth raising with your auditor now, not after.

Everything else

The IFRS 16 and IFRS 18 items are worth a mental note rather than a meeting — projects in motion, nothing effective yet. The rest — Equity Method, Statement of Cash Flows, Business Combinations, Hedge Accounting, and Intangible Assets — had no decisions with a near-term consequence for preparers this cycle. Full detail on all eight topics is in the IASB Update, July 2026 on ifrs.org.

If reverse factoring — or anything else on the Board's agenda — touches your reporting, raise it with us directly.

This article is for information purposes only. W.consulting accepts no responsibility for reliance placed on it. For an official view on any issue, please contact us.

Three items in June's IFRIC Update are worth checking against your own numbers now

tapiwa@wconsulting.co.za (Tapiwa Njikizana) — Mon, 14 Sep 2026 11:44:34 GMT

The Interpretations Committee covered eight matters at its June meeting. Five are presentation mechanics most entities won't need to act on yet. Three sit close enough to common structures — a manufacturer that also leases, a single-investor fund, a first-time IFRS 18 expense split — that it's worth testing your own facts against them before they're finalised, not after.

Why IFRIC moves faster than the IASB. An IASB standard or amendment usually comes with years of runway to an effective date. An IFRIC agenda decision doesn't change a standard — it clarifies how a standard that's already in force applies to a specific fact pattern, and once one is finalised, entities holding an inconsistent policy are expected to conform within a short window, often the next reporting period. That's why we flag IFRIC items at the tentative stage, not once they're settled.

Comments on all eight closed on 9 September 2026. None of them are final — the Committee will reconsider each at a future meeting before deciding whether to confirm it. Here's the triage.

Act now: you manufacture and lease what you sell

The fact pattern is specific: a manufacturer sells and leases the same vehicles, runs sales and both finance and operating leases as one line of business, refinances each lease contract with a bank regardless of type, and reports one gross-profit-like subtotal covering all of it, interest included. The Committee's view: that combination is likely a main business activity of providing financing to customers, and the fact that some of the leases are classified as operating rather than finance leases doesn't change that conclusion.

If your own business manages sales, finance leases, and operating leases as one activity with one performance measure spanning all three, this fact pattern is close enough to check directly. The classification affects where refinancing interest on your operating leases lands in the statement of profit or loss — operating category, not financing — which is a different presentation to what many manufacturer-lessors currently run.

Act now: you're the only investor in a fund someone else manages

The Committee considered a fund with one investor (holding 99.99%) and an agent fund manager (holding 0.01%, with broad decision-making authority but classified as an agent, not a principal). The question: does being the fund's only other party automatically mean the investor has delegated its decision-making authority to the manager, and so must treat the manager's rights as its own? The Committee said no — that shortcut isn't available. The investor still has to work through the full control assessment in IFRS 10, considering power, exposure to variable returns, and the ability to use that power, regardless of how the ownership is split.

This is a common structure for a wholly-owned or near-wholly-owned SPV, a captive investment vehicle, or a single-LP fund. If your consolidation conclusion for one of these currently rests on “well, there's only one of us,” that reasoning is exactly what the Committee has said isn't sufficient on its own.

Structure	What the Committee said
Manufacturer-lessor, mixed lease types	Aggregated lease activity is likely financing to customers, evidenced by the single gross-profit-like subtotal used
Single-investor fund, agent manager	Being the only other party doesn't, by itself, mean decision-making authority is deemed delegated — the full IFRS 10 assessment still applies

Watch: your first IFRS 18 expense split isn't obviously right or wrong

IFRS 18 lets an entity present operating expenses by nature, by function, or a mix of both — whichever gives the most useful structured summary. The Committee confirmed that a mixed presentation is required, not just permitted, whenever it genuinely produces the clearer summary, and that an entity can split expenses of the same nature across both nature-based and function-based line items, provided the labels make clear what's included in each. There's no single correct split — it's a judgement call, evidenced by what actually helps the reader.

Worth a closer look if you're applying IFRS 18 for the first time and haven't yet documented why your chosen split is the most useful one, rather than just the one your prior IAS 1 presentation defaulted to.

Also discussed, nothing to act on yet

Hypothetical income and expenses in a performance measure (AP2) — can still meet the definition of a management-defined performance measure; the label just has to say what it represents.
Confidential investor presentations (AP3) — pitch decks shared privately with named investors, under confidentiality, aren't “public communications” for MPM purposes.
Cash and cash equivalents classification (AP4A) — an entity investing in financial assets as a main activity classifies all cash and cash equivalent income/expense as operating, even if some relates to a separate financing-to-customers activity.
Specified liabilities classification (AP4B) — the financing-to-customers accounting policy choice applies group-wide, not just to the subsidiaries that finance customers directly.
Labelling a subtotal that's also a performance measure (AP7A) — the label doesn't have to list every excluded or included item; supporting detail can sit in the notes instead.

Full detail on all eight is in the June 2026 IFRIC Update.

Want to talk through whether one of these applies to your own structure? Bring us the fact pattern directly — this is exactly the kind of judgement call worth testing before year-end, not at it.

This article is for information purposes only. W.consulting accepts no responsibility for reliance placed on it. For an official view on any issue, please contact us.

Where do you want your hedging story to be told?

tapiwa@wconsulting.co.za (Tapiwa Njikizana) — Mon, 14 Sep 2026 11:44:30 GMT

Your business carries a currency exposure significant enough to warrant a formal risk committee, dedicated systems, and real management time. Hedging is the response to that risk, not the risk itself. When results season arrives, explaining what that risk did to performance, and what the hedge did about it, typically takes a slide that isn't in the financial statements, a line in the trading update, or a call with an analyst who wants the connection spelled out. If the risk mattered enough to warrant that much attention internally, it's worth asking why the financial statements themselves aren't doing more of that explaining.

The communication problem, in practice

You can see the communication problem every results season. Currency is one of the clearest examples of what happens when a material risk affects reported performance, yet the numbers do not, on their own, explain the economic story.

Vodacom reported Q1 FY27 revenue growth of 5.9% in rand terms, while management had to explain that underlying local-currency growth was 11.4%. Hulamin's CFO had to link a currency impact of more than R150 million to a separate gain of more than R300 million from higher aluminium prices before the combined effect on performance could be properly understood. Exxaro's 20% decline in earnings similarly required management to attribute the movement to the combined effects of rand strength and mining cost inflation.

These are not hedge-accounting examples. They illustrate the broader reporting problem: when a material risk and its economic consequences are not visible together in the reported figures, management must reconstruct that relationship for the market through commentary.

For a risk the business is actively hedging, that is precisely the gap that hedge accounting is designed to address. It brings the exposure, the hedge and their financial effects into the same reporting framework, allowing the financial statements themselves to communicate more of the economic relationship.

The choice, precisely stated

Hedge accounting is an accounting framework set out in IFRS 9. What's strategic is the decision to use it: management chooses whether to formally elect into that framework for a specific hedge, so the financial statements reflect the exposure and the hedge as a single, connected relationship. Without that election, the underlying economics don't change. The business may be well hedged and its risk management genuinely sound, but the accounting for the hedge and the exposure it protects can leave the connection between them unarticulated, a gap that management then must fill itself, every period, through commentary rather than the numbers.

Three things worth keeping separate

Economic hedging, the effectiveness of the broader risk management strategy, and the accounting representation achieved through hedge accounting are distinct concepts, and it's worth resisting the temptation to collapse them into one:

Economic hedging	Risk management effectiveness	Hedge accounting
Whatever exposure management protects against, using whatever instruments it chooses	Whether that protection worked: a judgement on strategy and outcomes, not on accounting treatment	The accounting framework that allows a formally elected hedge to be presented together with its exposure, as a single connected relationship, in the financial statements

The third column is narrower than it might sound. Hedge accounting is not a comprehensive scorecard for every economic hedge a business runs, only for those formally brought into the framework. A business can be extensively and effectively hedged, with very little of that activity reflected under hedge accounting at all.

Why a business might reasonably not apply it

There are legitimate reasons not to adopt hedge accounting, even for genuine, well-run hedging activity: the cost and complexity of the required documentation, systems limitations, a need for flexibility that a formal, locked-in arrangement would constrain, hedging strategies that shift too often to document properly, or specific hedges that simply fall outside what the framework allows. Economic hedging and hedge accounting are not the same thing, and choosing not to apply the framework isn't automatically a communication failure. What it does mean is that a larger share of the explanation moves outside the accounting numbers, into commentary that must be repeated and reconstructed every period, rather than sitting once within the discipline of the financial statements.

The question worth asking at board level

The strategic question for management is therefore not simply whether hedge accounting reduces accounting volatility. It is whether a material part of the company's risk-management story should be embedded in the discipline of financial reporting, or repeatedly reconstructed for the market outside that discipline.

Your next step. Ask whether the risks your business actively manages are significant enough for their story to belong in the financial statements, not just in the commentary around them. If they are, that's worth a deliberate board-level decision, not a default nobody chose.

Not sure whether your hedging programme is set up to tell the right story in your financial statements? Bring us the structure. This is exactly the kind of election worth getting right before year-end, not one you want to be explaining after the fact.

This article is for information purposes only. W.consulting accepts no responsibility for reliance placed on it. For an official view on any issue, please contact us.

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Mon, 31 Aug 2026 09:17:21 GMT

What the first wave of IFRS S2 reporters got wrong

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