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IASB proposes enhanced acquisition reporting transparency measures

Mar 14, 2024

On March 14, 2024, the International Accounting Standards Board (IASB) published a package of proposals aimed at enhancing the information companies provide to investors about acquisitions.

The proposals in the Exposure Draft respond to stakeholder feedback that reporting on acquisitions poses difficulties for both investors and companies:

  • Investors lack sufficient and timely information about acquisitions and post-acquisition performance.
  • Companies seek to provide useful information to investors but see risks and costs in providing some information, particularly commercially sensitive information that could be used by competitors.

Stakeholders have expressed concerns regarding the complexity and effectiveness of the impairment test for operations with allocated goodwill. In response, the IASB is proposing amendments to IFRS 3 Business Combinations. These changes would mandate companies to disclose objectives and performance targets of significant acquisitions, along with their subsequent achievements. Additionally, information on expected synergies for all material acquisitions would be required, with safeguards in place to protect sensitive acquisition objectives. The proposed amendments also include targeted improvements to the impairment test under IAS 36 Impairment of Assets.

The IASB is inviting feedback on the Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment by July 15, 2024.

Access the press release and the exposure draft on the IASB’s website.

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CSSB publishes exposure drafts for first Canadian Sustainability Disclosure Standards

Mar 14, 2024

The Canadian Sustainability Standards Board (CSSB) has published its proposals for the first Canadian Sustainability Disclosure Standards (CSDSs) based on IFRS S1 and IFRS S2. The consultation period is open until 10 June 2024.

The package comprises three consultation papers:

  • Proposed Criteria for Modification Framework
  • Proposed CSDS 1 General Requirements for Disclosure of Sustainability-related Financial Information
  • Proposed CSDS 2 Climate-related Disclosures

The proposed Criteria for Modification Framework presents the basis on which the CSSB could introduce changes to the ISSB standards. These criteria ensure that Canadian standards align with international standards while addressing Canadian public interest.

The proposed CSDS 1 and CSDS 2 are based on IFRS S1 and IFRS S2 with the following modifications: 

  • The proposed effective dates for CSDS 1 and CSDS 2 have been extended by one year compared to that of IFRS S1 and IFRS S2 (i.e. the proposed standards would become voluntarily effective for annual reporting periods beginning on or after 1 January 2025);
  • The proposed transition relief for disclosures beyond climate-related risks and opportunities has been extended from one year to two years;
  • The proposed requirements to disclose comparative information have been changed to align with the proposed modification for the transition relief; and
  • The proposed transition relief for disclosure of Scope 3 GHG emissions has been extended from one year to two years.

Please click to access the following on the Financial Reporting and Assurance Standards (FRAS) Canada website:

Note: On 10 April 2024, the CSSB offers a webinar on the proposed new standards. Please click for more information here.

 

SEC (US Securities and Exchange Commission) Image

SEC Adopts Rules to Enhance and Standardize Climate-Related Disclosures for Investors

Mar 06, 2024

On March 6, 2024, the Securities and Exchange Commission (SEC) adopted rules to enhance and standardize climate-related disclosures by public companies and in public offerings.

The final rules reflect the Commission’s efforts to respond to investors’ demand for more consistent, comparable, and reliable information about the financial effects of climate-related risks on a registrant’s operations and how it manages those risks while balancing concerns about mitigating the associated costs of the rules.

According to a fact sheet posted by the SEC, the final rules will require a registrant to disclose, among other things:

  • material climate-related risks;
  • activities to mitigate or adapt to such risks;
  • information about the registrant's board of directors' oversight of climate-related risks and management’s role in managing material climate-related risks; and
  • information on any climate-related targets or goals that are material to the registrant's business, results of operations, or financial condition.

In a major change to the proposed rule, the SEC has decided to remove the requirement to disclose Scope 3 greenhouse gas (GHG) emissions and only require disclosure of Scope 1 and/or Scope 2 GHG emissions on a phased-in basis by certain larger registrants when those emissions are material.

All domestic and foreign registrants, except for asset-backed issuers, must provide the

disclosures. smaller reporting companies (SRCs), emerging growth companies (EGCs), and nonaccelerated filers are exempt from the Scope 1 and Scope 2 GHG emission disclosure requirements but must provide all other disclosures.

The final rules will become effective 60 days after publication in the Federal Register, and compliance will be phased in from 2025 to 2033.

Access the final rule,  fact sheet and  press release on the SEC’s website.

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IVSC releases fifth perspective paper on intangible assets

Mar 04, 2024

On March 4, 2024, the International Valuation Standards Council (IVSC) published its fifth perspective paper “Data and Valuation” within the framework of its ongoing series “Time to get Tangible about Intangible Assets' that notes that despite the importance of intangible assets to the capital markets, only a small percentage are recognised on balance sheets.

The series on perspectives papers is now as follows:

Access the press release on the IVSC’s website.

 

 

 

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Updated IASB and ISSB work plan — Analysis (February 2024)

Feb 29, 2024

Following the IASB's and ISSB's February 2024 meetings, we have analysed the work plan on the IFRS Foundation website to see what changes have resulted from the meetings and other developments since the work plan was last revised in January 2024.

Below is an analysis of all changes made to the work plan since our last analysis on January 29, 2024

Standard-setting projects

  • Disclosure initiative — Subsidiaries without public accountability: Disclosures — A final standard is now expected in May 2024 (previously April 2024)

Maintenance projects

  • Addendum to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard — The exposure draft is now expected in April 2024 (previously Q2 2024)
  • Annual Improvements to IFRS Accounting Standards Final amendments of the following projects are expected in Q3 2024:
    • Cost Method (Amendments to IAS 7)
    •  Derecognition of Lease Liabilities (Amendments to IFRS 9)
    • Determination of a ‘De Facto Agent’ (Amendments to IFRS 10)
    • Disclosure of Deferred Difference between Fair Value and Transaction Price (Amendments to Guidance on implementing IFRS 7)
    • Gain or Loss on Derecognition (Amendments to IFRS 7)
    • Hedge Accounting by a First-time Adopter (Amendments to IFRS 1)
    • Introduction and Credit Risk Disclosures (Amendments to Guidance on implementing IFRS 7)
    • Transaction Price (Amendments to IFRS 9)
  •  Climate-related and Other Uncertainties in the Financial Statements — A decision on the project direction is now expected in April 2024 (previously Q2 2024) 
  • Power purchase agreements — The exposure draft is now expected in May 2024 (previously Q2 2024) 
  • Updating the Subsidiaries without Public Accountability: Disclosures Standard — The exposure draft is now expected in Q3 2024 (previously Q2 2024) 
  • Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity (IAS 21) — The exposure draft is now expected in Q3 2024 (previously H2 2024)

Research projects

Governance 

Other projects

The above is a faithful comparison of the IASB and ISSB work plan on 29 January 2024 and 29 February 2024.

For access to the current work plan at any time, please click here.

 

 

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IASB issues podcast on latest Board developments (February 2024)

Feb 29, 2024

On February 29, 2024, the IASB released a podcast hosted by Executive Technical Director Nili Shah featuring IASB Chair Andreas Barckow and IASB Vice-Chair Linda Mezon-Hutter discussing the deliberations at the February 2024 IASB meeting.

The podcast highlights some of the projects that were discussed during the meeting, including:

  • updates to the work plan;
  • post-implementation review of IFRS 15; 
  • rate-regulated activities;
  • second comprehensive review of the IFRS for SMEsAccounting Standard.

The podcast can be accessed here on the IFRS Foundation website.

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IFRS Foundation releases summary of national standard-setters' research on materiality judgment guidance

Feb 27, 2024

On February 27, 2024, the IFRS Foundation issued a comprehensive summary that compiled evidence from national accounting standard-setters concerning the impact of guidance on materiality judgments within IFRS Accounting Standards and related materials.

Materiality judgment demands that companies assess whether information could reasonably influence investor decisions.

In 2017 and 2018, the IASB's refined the definition of materiality and furnish guidance along with case studies to facilitate informed judgments. In 2022, the IFRS Foundation issued a call for research as it was seeking to partner with national standard-setters to gather research and information related to the changes and additions to the IASB’s literature on making materiality judgments.

The findings of the research underscored a robust understanding of materiality's concept. While utilization of the 2017 and 2018 guidance exhibited disparities across regions, where implemented, it proved beneficial. Moreover, the research advocates for sustained efforts to raise awareness among stakeholders regarding the available guidance. Looking ahead, the IASB remains committed to providing further assistance to companies navigating materiality judgments, with insights from its research poised to influence ongoing discussions, including those within projects such as the initiative regarding climate-related and other uncertainties in the financial statements.

The national standard-setters taking part in the research initiative, working in partnership with academics from their jurisdictions, are from Australia, Botswana, China, Malaysia, Mexico and New Zealand.

Access the research summary on IFRS Foundation’s website.

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ISSB publishes February 2024 podcast

Feb 27, 2024

On February 27, 2024, the International Sustainability Standards Board (ISSB) released a podcast hosted by ISSB Chair Emmanuel Faber and Vice-Chair Jingdong Hua discussing the latest developments from the ISSB.

The podcast discusses the following:

  • February ISSB meeting in New York City
  • Key takeaways from the IFRS Sustainability Symposium
  • Preview of the Inaugural Jurisdictional Guide for the adoption or other use of ISSB Standards
  • Webcast and educational material highlighting the importance of industry-specific disclosures to investors
  • Update on the capacity building programme

Access the press release on the IFRS Foundation website.

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AcSB Exposure Draft – Financial Instruments with Characteristics of Equity

Feb 22, 2024

On February 22, 2024, the Accounting Standards Board (AcSB) proposed to incorporate into Part I of the CPA Canada Handbook – Accounting, amendments to IAS 32 Financial Instruments: Presentation, IFRS 7 Financial Instruments: Disclosures, and IAS 1 Presentation of Financial Statements.

This AcSB Exposure Draft reflects proposals made by the International Accounting Standards Board (IASB) that the AcSB intends to adopt, subject to deliberating comments received, as Canadian generally accepted accounting principles.

The IASB’s Exposure Draft proposes to address the diversity in practice and respond to investor feedback by:

  • clarifying the underlying classification principles of IAS 32 to help companies distinguish between financial liabilities and equity;
  • requiring companies to disclose information to further explain the complexities of instruments that have both debt and equity features; and
  • introducing new presentation requirements for amounts—including profit and total comprehensive income—attributable to ordinary shareholders separately from amounts attributable to other holders of equity instruments.

AcSB urges stakeholders in Canada to provide feedback to the IASB regarding its Exposure Draft. The IASB has outlined specific questions for input in its Invitation to Comment within the Exposure Draft. The AcSB advises that comment letters should be sent directly to the IASB, with a copy also sent to the AcSB. Comments to the IASB are due by March 29, 2024.

Access the press release on FRAS Canada’s website.

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CSA Provides Updated Guidance on Virtual Shareholder Meetings

Feb 22, 2024

On February 22, 2024, the Canadian Securities Administrators (CSA) provided reporting issuers updated guidance on virtual shareholder meetings following initial guidance provided in February 2022.

This follows concerns raised by shareholders about limitations in exercising their rights and participating effectively in such meetings. The guidance aims to help companies comply with regulations and ensure better engagement and access to information for shareholders during virtual meetings.

In order for reporting issuers to fulfill their obligations under securities legislation, it is important that reporting issuers provide clear and comprehensive disclosure in management information circulars and associated proxy-related materials with respect to the logistics for accessing, participating and voting at a virtual meeting.

Reporting issuers can facilitate shareholder participation at virtual shareholder meetings by:

  • simplifying registration and authentication procedures
  • providing shareholders with opportunities to make motions or raise points of order
  • ensuring shareholders have the ability to raise questions and provide direct feedback to management in any question-and-answer segment of the meeting
  • indicating where shareholder proposals will be presented and voted on at the meeting, coordinating with proponents of those proposals in advance of the meeting, and ensuring proponents are given a reasonable opportunity to speak to the proposal and respond to any questions that arise from the proposal
  • ensuring any virtual platform used by an issuer has functionality permitting shareholder participation to the fullest extent possible; and
  • ensuring the Chair is experienced and knowledgeable in the technological platform being used for the virtual meeting.

CSA Staff will continue to monitor the practice of virtual shareholder meetings, including reviewing disclosure in proxy-related materials during the upcoming proxy season. Further guidance and updates may be issued, as required.

Access the updated guidance on the CSA’s website.

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