Our Ref.: C/FRSCSent electronically through the IASB Website (www.ifrs.org)
20 April 2026Dr Andreas BarckowInternational Accounting Standards BoardColumbus Building7 Westferry CircusCanary WharfLondon E14 4HDUnited KingdomDear Andreas,IASB Exposure DraftAmendments to the Fair Value Option for Investments in Associates andJoint Ventures (Proposed amendments to IAS 28)
The Hong Kong Institute of Certified Public Accountants (HKICPA) is the only bodyauthorised by law to set and promulgate standards relating to financial reporting, auditing,ethics and sustainability disclosures for professional accountants in Hong Kong. We aregrateful for the opportunity to provide you with our comments on this Exposure Draft(ED).We appreciate the IASB’s endeavours in formulating proposals to address diversity inthe application of the fair value option requirements in IAS 28 Investments in Associatesand Joint Ventures and the effects of that diversity on the classification of income andexpenses in the statement of profit or loss under IFRS 18 Presentation and Disclosurein Financial Statements. Overall, we support the proposed amendments to paragraphs18-19 of IAS 28. We also agree with the proposed effective date, which aligns with theeffective date of IFRS 18, as well as the proposed transition provisions. Nevertheless,we have the following recommendations for the IASB’s consideration.Investments in associates and joint ventures that do not form part of the main businessactivity of an entityWe consider that the proposed amendments to paragraph 18 of IAS 28 are clear in thatan entity whose main business activity is investing in assets is permitted to apply the fairvalue option to any of its investments in associates and joint ventures, even if that mainbusiness activity does not include investing in associates and joint ventures. However,the wording in BC 15-16 of the ED may give rise to uncertainty regarding the scope ofthe proposals, in particular whether the fair value option is restricted to the investmentsin associates and joint ventures that form part of the entity’s main business activity. Thislack of clarity is particularly relevant given that the issue was initially raised in the contextof investments in associates and joint ventures that form part of the main businessactivity of insurance companies.Page 2 of 3In addition, the implications of the proposal for classification outcomes under IFRS 18may not be sufficiently explicit. In particular, for entities whose main business activity isinvesting in assets, but whose investments in associates and joint ventures do not formpart of that main business activity, it may not be clear that income and expenses arisingfrom those investments would be classified in the investing category, but not in theoperating category, in the statement of profit or loss in accordance with paragraph 53 ofIFRS 18.To avoid potential misinterpretation of the proposed amendments, we recommend thatthe IASB provide the following clarifications in BC15-16 of the ED:
i) the interaction between the proposed amendments and IFRS 18, specifically that theproposed amendments affect only the measurement of an investment in anassociate or joint venture, while the presentation and classification of income andexpenses arising from such investments remain subject to the requirements ofIFRS 18;
ii) an entity whose main business activity is investing in assets can apply the fair valueoption to any of its investments in associates and joint ventures, even if that mainbusiness activity does not include investing in associates and joint ventures; andiii) income and expenses arising from investments in associates and joint ventures thatdo not form part of the entity’s main business activities would be classified in theinvesting category, but not in the operating category, in the statement of profit or lossunder IFRS 18.An unrestricted fair value optionSome respondents agreed with the alternative views in the ED that there is no clearconceptual basis for restricting the fair value option for investments in associates andjoint ventures to particular entities. They questioned why entities whose main businessactivity is investing in particular assets are permitted to elect the fair value option, whileother entities are not, particularly when such investments are not required to form partof that main business activity. In their view, the proposed amendments could introducefinancial reporting bias.Notwithstanding these concerns, given the urgency of addressing the issue before IFRS18 becomes effective, these respondents supported the proposed amendments as aninterim improvement. They also recommended that the IASB consider introducing anunrestricted fair value option in the future. In light of this feedback, we suggest that theIASB take into account the feedback received on the ED when considering whether thismatter should be addressed as part of its future standard-setting activities.Work undertaken by HKICPA in forming its views:
In response to this ED, the HKICPA:
a)
issued an Invitation to Comment on the ED on 20 February 2026 to its membersand other stakeholders;
b)
sought input from its Business Combinations and Reporting Entity Advisory Paneland Insurance Advisory Panel, which mainly comprise technical and industryexperts from accounting firms;
c)
conducted a targeted outreach to a former auditor and technical expert; andd)
developed its views through its Financial Reporting Standards Committee, havingreflected on its respondents’ views. The Committee comprises preparerrepresentatives from various industry sectors, regulators, as well as technical andindustry experts from small, medium and large accounting firms.Page 3 of 3If you have any questions regarding the matters raised in this letter, please contactKatherine Leung (katherineleung@hkicpa.org.hk), Associate Director of the StandardSetting Department.Sincerely,Cecilia KweiDirector of Standard Setting
IASB Exposure Draft - Amendments to the Fair Value Option for Investments in Associates and Joint Ventures (Proposed amendments to IAS 28)
下载原件Our Ref.: C/FRSCSent electronically through the IASB Website (www.ifrs.org)
20 April 2026Dr Andreas BarckowInternational Accounting Standards BoardColumbus Building7 Westferry CircusCanary WharfLondon E14 4HDUnited KingdomDear Andreas,IASB Exposure DraftAmendments to the Fair Value Option for Investments in Associates andJoint Ventures (Proposed amendments to IAS 28)
The Hong Kong Institute of Certified Public Accountants (HKICPA) is the only bodyauthorised by law to set and promulgate standards relating to financial reporting, auditing,ethics and sustainability disclosures for professional accountants in Hong Kong. We aregrateful for the opportunity to provide you with our comments on this Exposure Draft(ED).We appreciate the IASB’s endeavours in formulating proposals to address diversity inthe application of the fair value option requirements in IAS 28 Investments in Associatesand Joint Ventures and the effects of that diversity on the classification of income andexpenses in the statement of profit or loss under IFRS 18 Presentation and Disclosurein Financial Statements. Overall, we support the proposed amendments to paragraphs18-19 of IAS 28. We also agree with the proposed effective date, which aligns with theeffective date of IFRS 18, as well as the proposed transition provisions. Nevertheless,we have the following recommendations for the IASB’s consideration.Investments in associates and joint ventures that do not form part of the main businessactivity of an entityWe consider that the proposed amendments to paragraph 18 of IAS 28 are clear in thatan entity whose main business activity is investing in assets is permitted to apply the fairvalue option to any of its investments in associates and joint ventures, even if that mainbusiness activity does not include investing in associates and joint ventures. However,the wording in BC 15-16 of the ED may give rise to uncertainty regarding the scope ofthe proposals, in particular whether the fair value option is restricted to the investmentsin associates and joint ventures that form part of the entity’s main business activity. Thislack of clarity is particularly relevant given that the issue was initially raised in the contextof investments in associates and joint ventures that form part of the main businessactivity of insurance companies.Page 2 of 3In addition, the implications of the proposal for classification outcomes under IFRS 18may not be sufficiently explicit. In particular, for entities whose main business activity isinvesting in assets, but whose investments in associates and joint ventures do not formpart of that main business activity, it may not be clear that income and expenses arisingfrom those investments would be classified in the investing category, but not in theoperating category, in the statement of profit or loss in accordance with paragraph 53 ofIFRS 18.To avoid potential misinterpretation of the proposed amendments, we recommend thatthe IASB provide the following clarifications in BC15-16 of the ED:
i) the interaction between the proposed amendments and IFRS 18, specifically that theproposed amendments affect only the measurement of an investment in anassociate or joint venture, while the presentation and classification of income andexpenses arising from such investments remain subject to the requirements ofIFRS 18;
ii) an entity whose main business activity is investing in assets can apply the fair valueoption to any of its investments in associates and joint ventures, even if that mainbusiness activity does not include investing in associates and joint ventures; andiii) income and expenses arising from investments in associates and joint ventures thatdo not form part of the entity’s main business activities would be classified in theinvesting category, but not in the operating category, in the statement of profit or lossunder IFRS 18.An unrestricted fair value optionSome respondents agreed with the alternative views in the ED that there is no clearconceptual basis for restricting the fair value option for investments in associates andjoint ventures to particular entities. They questioned why entities whose main businessactivity is investing in particular assets are permitted to elect the fair value option, whileother entities are not, particularly when such investments are not required to form partof that main business activity. In their view, the proposed amendments could introducefinancial reporting bias.Notwithstanding these concerns, given the urgency of addressing the issue before IFRS18 becomes effective, these respondents supported the proposed amendments as aninterim improvement. They also recommended that the IASB consider introducing anunrestricted fair value option in the future. In light of this feedback, we suggest that theIASB take into account the feedback received on the ED when considering whether thismatter should be addressed as part of its future standard-setting activities.Work undertaken by HKICPA in forming its views:
In response to this ED, the HKICPA:
a)
issued an Invitation to Comment on the ED on 20 February 2026 to its membersand other stakeholders;
b)
sought input from its Business Combinations and Reporting Entity Advisory Paneland Insurance Advisory Panel, which mainly comprise technical and industryexperts from accounting firms;
c)
conducted a targeted outreach to a former auditor and technical expert; andd)
developed its views through its Financial Reporting Standards Committee, havingreflected on its respondents’ views. The Committee comprises preparerrepresentatives from various industry sectors, regulators, as well as technical andindustry experts from small, medium and large accounting firms.Page 3 of 3If you have any questions regarding the matters raised in this letter, please contactKatherine Leung (katherineleung@hkicpa.org.hk), Associate Director of the StandardSetting Department.Sincerely,Cecilia KweiDirector of Standard Setting