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Deloitte believes that the review of IFRS 3 merits particularly careful consideration as this is a standard that frequently presents conceptual and practical issues in preparing and auditing financial statements and addresses highly significant transactions that might frequently be an area of focus for users. Deloitte encourages the Board to, as far as possible, address these issues as part of the post-implementation review.
One question with both conceptual and practical implications to which Deloitte believes the Board should give serious consideration as part of the post-implementation review is the appropriate subsequent measurement of goodwill and indefinite life intangible assets acquired in a business combination. Deloitte recognises the conceptual merits of the current model of non-amortisation coupled with a full annual impairment test but note that this remains, despite ongoing investment in training and education, a source of constant challenge from both securities and audit regulators. Deloitte encourages the Board to consult with stakeholders to determine whether the informational value provided by this approach justifies the costs of its application and whether any simplification or clarification of the impairment testing model is possible.
Deloitte recognises that a full consideration of this issue may be outside the scope of a post-implementation review of IFRS 3, given it would involve a reappraisal of a conceptual decision reached in the development of the standard and any modification of impairment testing requirements would necessitate amendments to IAS 36 "Impairment of Assets". Nevertheless, we believe the issue is significant and that the post-implementation review provides an appropriate opportunity to begin its consideration.