The IFRS Interpretations Committee (the “Committee”) is an interpretative body of the International Accounting Standards Board (the “IASB”) which works with the Board in supporting the application of IFRS Standards.

Agenda decisions are a way of making a statement about why a change of an IFRS Standard requirement or an interpretation of that requirement is unnecessary. They often include explanatory information that is intended to provide guidance for the consistent application of IFRS Standards. The Board expects entities to implement accounting policy changes in a timely manner if their policies are inconsistent with an agenda decision.

Both agenda decisions issued so far in 2026 relate to IFRS 9 Financial Instruments. We bring a brief summary of both decisions below. The full text of these agenda decisions can be found here.

Determining and accounting for transaction costs

Published in January 2026

The IFRS Interpretations Committee considered whether costs incurred before entering into a contractual arrangement can meet the definition of transaction costs under IFRS 9. The fact pattern involved legal and advisory fees incurred in connection with negotiating a proposed loan agreement that had not yet been signed by the reporting date.

The Committee observed that costs incurred before the execution of a financial instrument are not, in themselves, excluded from qualifying as transaction costs. If such costs are directly attributable to the origination or issuance of the financial instrument and are incremental in nature, they may meet the definition of transaction costs in Appendix A of IFRS 9, even though the contractual arrangement has not yet been finalised and there remains a possibility that it may not ultimately be concluded.

In terms of accounting, the Committee noted that, in practice, such costs are generally recognised in the statement of financial position before the contract is entered into, typically as prepayments or other assets.

Based on the evidence obtained, the Committee concluded that there is no widespread diversity in practice with a potentially material effect on financial statements. Accordingly, it decided not to add a standard-setting project to its work plan.

Embedded prepayment option

Published in February 2026

The IFRS Interpretations Committee considered the application of paragraph B4.3.5 of IFRS 9 in assessing whether an embedded prepayment option in a loan contract should be separated from the host financial liability. The question focused on the meaning of the term “the entity” in paragraph B4.3.5(e)(ii), specifically whether it refers to the lender or to the reporting entity, being the borrower.

The issue is relevant because the assessment of whether the prepayment option is closely related to the host contract may differ depending on the perspective applied. This, in turn, may affect whether the embedded feature is separated and measured at fair value through profit or loss, while the host liability remains measured at amortised cost, or whether the entire liability is accounted for at amortised cost.

Based on the evidence obtained, the Committee observed no widespread diversity in practice that could materially affect financial statements. Feedback indicated that stakeholders generally interpret the reference to “the entity” in paragraph B4.3.5(e)(ii) as referring to the lender, meaning that lost interest is assessed from the lender’s perspective. Accordingly, the Committee concluded that the matter does not have a widespread effect and decided not to add a standard-setting project to its work plan.