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ISSB publishes March 2024 podcast

19 Mar 2024

The ISSB has released a podcast hosted by ISSB Chair Emmanuel Faber and Vice-Chair Sue Lloyd discussing the latest developments from the ISSB.

The podcast discusses the following:

  • the ISSB’s work with jurisdictions around the world;
  • the recent SEC ruling;
  • key takeaways from the SSAF meeting, the ISSB meeting and the TIG meeting;
  • the ISSB's strategic direction and balance of activities for the next two-year work plan;
  • the IFRS Sustainability Disclosure Taxonomy; and
  • further ISSB activities in March.

    For more information and access to the podcast, please see the press release on the IFRS Foundation website.

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    Pre-meeting summaries for the March 2024 IASB meeting

    15 Mar 2024

    The IASB will meet in London on 18-21 March 2024. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. We summarised the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

    The following topics are on the agenda:

    Board work plan update: The staff will provide an overview of the work plan. In particular, the staff will present completed projects, new projects, expected consultation documents and expected project completions.

    Post-implementation review (PIR) of IFRS 9—Impairment: The IASB will deliberate the feedback received in response to its request for information Post-implementation Review—IFRS 9 Financial Instruments—Impairment. The staff recommends that the IASB does not take any further action on the matters raised by respondents regarding the use of forward-looking scenarios and post-model adjustments or management overlays in measuring expected credit losses.

    Power purchase agreements: The staff will provide recommendations for amendments to propose in an exposure draft and ask for permission to begin the balloting process. In particular, the staff recommends proposed amendments to the own-use requirements and to the hedge accounting requirements. The staff also recommends that the IASB propose a scope for the amendments, and disclosure and transition requirements.

    Second comprehensive review of the IFRS for SMEs Standard: The IASB will continue the redeliberations of its proposals in the exposure draft (ED) Third edition of the IFRS for SMEs Accounting Standard. In particular, the IASB will discuss the proposed revised Section 23 Revenue from Contracts with Customers, additional and alternative simplifications, other issues raised by respondents to the ED, proposed revised Section 2 Concepts and Pervasive Principles and updating the paragraph numbers of the IFRS for SMEs standard.

    Climate-related and other uncertainties in the financial statements: The staff will explain the approach it has taken to develop examples illustrating how to apply requirements in IFRS Accounting Standards to report the effects of climate-related and other uncertainties in financial statements.

    Maintenance and consistent application: The IASB will discuss whether and to what extent the proposed disclosures requirements in the forthcoming exposure draft (ED) Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity should apply to subsidiaries without public accountability. The staff will also ask for permission to ballot the ED.

    PIR of IFRS 15 Revenue from Contracts with Customers: In this session, the IASB will further analyse the feedback specific to determining the transaction price, determining when to recognise revenue and disclosure requirements of IFRS 15. The staff recommends that the IASB take no further action on those items.

    Equity method: The staff will ask the IASB to clarify its tentative decision regarding transitional requirements for the proposed amendments to IAS 28 and to agree on the due process steps for the exposure draft.

    Management commentary: The IASB will be asked for comments and questions on the discussion about the direction of the management commentary project. The staff has identified the following four broad alternative directions that the IASB could take at a future meeting: finalise the project; retire the project; undertake a broader project; and keep the project on hold.

    Catch-up exposure draft of the forthcoming IFRS 19 Subsidiaries without Public Accountability: Disclosures: The staff will ask the IASB to agree on disclosure requirements to propose in the “catch-up exposure draft” following the publication of IFRS 19.

    Rate-regulated activities: The IASB will continue to redeliberate the proposals in the exposure draft Regulatory Assets and Regulatory Liabilities, in particular the discount rate and reduced disclosure requirements.

    Our pre-meet­ing summaries is available on our March meeting notes page and will be sup­ple­mented with our popular meeting notes after the meeting.

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    GHG Protocol releases draft summaries of Scope 3 Standard feedback

    15 Mar 2024

    The Greenhouse Gas (GHG) Protocol secretariat has released a draft summary report providing a detailed overview of stakeholder feedback from a survey it conducted on its Scope 3 Standard. In addition, the secretariat has released a proposal summary giving an overview of proposal submissions related to the Scope 3 Standard.

    The inclusion of feedback in the summaries does not indicate that a recommendation will be implemented or reflected in updates to either the Scope 3 Standard or Scope 3 Technical Guidance. Instead, the GHG Protocol secretariat and governance bodies are prioritising which topics to address in the update process, including the scope of work for updates and additional guidance and resources.

    According to the draft summary report, the aim of any updates will be to align with best practice approaches to ensure that the GHG Protocol standards for corporate accounting and reporting are effective in providing a rigorous and credible accounting foundation for businesses to measure, plan, and track progress toward science-based and net-zero targets in line with the global 1.5°C goal. Any future updates will seek harmonisation and interoperability with accounting rules under development through major disclosure initiatives.

    The review period for the summaries is open until 15 April 2024.  

    Please click to access the following on the GHG Protocol website:

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    CSSB publishes exposure drafts for first Canadian Sustainability Disclosure Standards

    14 Mar 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.

     

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    IASB proposes enhanced information on acquisitions

    14 Mar 2024

    The International Accounting Standards Board (IASB) has published an exposure draft IASB/ED/2024/1 'Business Combinations — Disclosures, Goodwill and Impairment (Proposed amendments to IFRS 3 and IAS 36)'. Comments are requested by 15 July 2024.

     

    Background

    This project results from the post-implementation review of IFRS 3 Business Combinations.

    The feedback on the post-implementation review had revealed that impairment of goodwill is not always recognised in a timely fashion and that disclosures required by IFRSs do not provide enough information to understand whether the acquired business is performing as was expected at the time of the acquisition. There were also comments that the impairment test required for goodwill under IAS 36 Impairment of Assets is costly and complex.

    The IASB therefore decided to investigate possible improvements to IFRS 3 Business Combinations and IAS 36 and a discussion paper was published on 19 March 2020.

    The exposure draft published today considers feedback received on the discussion paper and proposes amendments to IFRS 3 and IAS 36 that aim at providing users with information that would allow them to better assess the performance of an entity’s business combinations and how efficiently and effectively management has used the entity’s economic resources to acquire these businesses.

     

    Suggested changes

    The proposed amendments in exposure draft IASB/ED/2024/1 Business Combinations — Disclosures, Goodwill and Impairment (Proposed amendments to IFRS 3 and IAS 36) are:

    Proposed amendments to IFRS 3

    • For strategic business combinations, which are a subset of material business combinations and are identified using a set of thresholds in IFRS 3, an entity would be required to provide information about its acquisition-date key objectives and related targets for the business combination and whether these key objectives and related targets are being met. An entity would only have to disclose information that is reviewed by its key management personnel.
    • Entities would be exempted from disclosing some of the information if that information is commercially sensitive or would expose the entity to litigation risk.
    • The exposure draft includes several other proposed amendments to the disclosure requirements in IFRS 3, including new disclosure objectives and disclosure requirements around expected synergies the strategic rationale for the business combination.

    Proposed amendments to IAS 36

    • The IASB proposes amendments to the impairment test in IAS 36 to reduce shielding by clarifying how to allocate goodwill to cash-generating units.
    • Other proposed amendments regard the disclosure in which reportable segment a (group of) cash-generating unit is included and how an entity calculates an asset’s value in use. 

    Other proposed amendments

    • The exposure draft also proposes to amend the forthcoming IFRS 19 Subsidiaries without Public Accountability: Disclosures regarding disclosures about the strategic rationale for a business combination, the expected synergies, the contribution of the acquired business and the discount rate used in calculating the value in use.

      Comments on the proposed changes are requested by 15 July 2024.

       

      Effective date

      The IASB will decide on the effective date for the proposed amendments after exposure. The IASB proposes to require an entity to apply the amendments retrospectively. Earlier application would be permitted.

       

      Additional information

      Please click for:

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        Agenda for the March 2024 ASAF meeting

        12 Mar 2024

        The IFRS Foundation has released an agenda and meeting papers for the meeting of the Accounting Standards Advisory Forum (ASAF), which will be held in London on 25-26 March 2024.

        A summary of the agenda is set out below:

        Monday 25 March 2024 (10:15-17:30)

        • Agenda planning and feedback from previous ASAF meetings
        • Subsidiaries without public accountability: disclosures
        • Rate-regulated activities
        • Post-implementation review of IFRS 9 — impairment
        • Amendments to the classification and measurement of financial instruments

        Tuesday 26 March 2024 (9:00-13:15)

        • Post-implementation review of IFRS 15 Revenue from Contract with Customers
        • Climate-related and other uncertainties in the financial statements
        • EFRAG project on variable consideration
        • Financial instruments with characteristics of equity

        Agenda papers for the meeting are available on the IFRS Foun­da­tion website.

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        C&S annual report reveals increase in sustainability policies

        12 Mar 2024

        Carrots & Sticks (C&S) has published the 2023 edition of its annual report, which presents a comprehensive assessment of environmental, social and governance (ESG) and sustainability policy worldwide. The report highlights the expanding nature of ESG and sustainability policies since 2020.

        The report provides analyses over 2,463 policies from 132 countries, 76 international and regional organisations from 1897 to the present day. The report notes a steep rise in voluntary policies since the UN Sustainable Decelopment Goals (SDGs) were launched in 2015.

        According to the report, there is a dominance of government entities as policy issuers and a prevalence of voluntary (over mandatory) policies. Most policies fall into the "low restrictiveness" category, which suggests limited power of enforcement.

        The full report is available on the C&S website.

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        Pre-meeting summaries for the March 2024 ISSB meeting

        11 Mar 2024

        The ISSB will meet in Frankfurt on 13 March 2024. We have posted our pre-meeting summaries for the meeting that allow you to follow the ISSB’s decision making more closely. We summarised the agenda papers made available by the ISSB staff and point out the main issues to be discussed by the ISSB and the staff recommendations.

        The following topic is on the agenda:

        ISSB consultation on agenda priorities: The ISSB will discuss the strategic direction of its activities. The staff recommends the following level of focus placed on each activity: a high level of focus on ‘supporting the implementation of IFRS S1 and IFRS S2’; a slightly lower, but equal level of focus on each ‘enhancing the SASB standards’ and ‘beginning new research and standard-setting projects’ when compared to ‘supporting the implementation of IFRS S1 and IFRS S2’; no specific level of focus on activities related to connectivity, interoperability and stakeholder engagement as these are all fundamental to the work the ISSB will perform in other activities; and reserved capacity for flexibility in the ISSB’s work to allow for the consideration of emerging issues and to support the IASB on projects/activities, as necessary.

        Our pre-meeting summaries are available on our March meeting notes page and will be supplemented with our popular meeting notes after the meeting.

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        IFRS Interpretations Committee holds March 2024 meeting

        11 Mar 2024

        The IFRS Interpretations Committee (IFRS IC) met in London on 5 March 2024. The IFRS IC discussed the finalisation of two agenda decisions and gave input into one IASB project.

        Finalisation of agenda decision—IAS 37 Provisions, Contingent Liabilities and Contingent Assets—Climate-related Commitment: In its November 2023 meeting, the IFRS IC discussed a submission asking its views on how IAS 37 applies to climate-related commitments to a fact pattern where an entity, which is a manufacturer of household products, publicly states a net-zero transition commitment. The manufacturer published a detailed plan for the modification of the manufacturing method to achieve 60% reduction in emissions in nine years and to buy carbon credits to offset its remaining emissions after those nine years. The IFRS IC concluded that whether there is a constructive obligation depends on different facts and circumstances. The present obligation and probable outflow criteria are satisfied only after nine years and thereafter as the entity emits greenhouse gases. 43 comment letters were received and most of the respondents agreed with the technical analysis in the tentative agenda decision and agreed not to recommend that the IASB consider adding a standard-setting project to the work plan. The IFRS IC decided to finalise the agenda decision and suggested changes to the drafting of the agenda decision. 

        Finalisation of agenda decision—IFRS 3 Business Combinations—Payments Contingent on Continued Employment during Handover Periods: In its September 2023 meeting, the IFRS IC received a submission about how an entity accounts for payments (as part of the acquisition agreement) to the sellers of an acquired business. The payments and continued employment aim to ensure the appropriate transfer of knowledge from the sellers to the new management team. The sellers are remunerated for their services at a level comparable to other management executives, but some of the consideration for the shares is withheld until the handover is complete and is forfeited if the individual leaves employment before completion of the handover. The sellers are also entitled to additional payments that are contingent upon meeting a specified level of financial performance and the continued employment during a limited period. The IFRS IC concluded that the evidence it gathered did not indicate that there is significant diversity in the accounting treatment and entities apply the accounting described in the agenda decision published in January 2013. 11 comment letters were received and most of the respondents agreed with the technical analysis in the tentative agenda decision. The IFRS IC decided to finalise the agenda decision.

        IFRS IC input to IASB projects—Post-implementation Review of IFRS 9 Financial Instruments—Impairment: IFRS IC members provided their input to the IASB’s post-implementation review (PIR) of the impairment requirements in IFRS 9—specifically, on application matters related to determining expected credit losses (ECL) for intragroup financial instruments, loan commitments, financial guarantee contracts and purchased or originated credit-impaired (POCI) financial assets.

        More In­for­ma­tion

        Please click to access the detailed notes taken by Deloitte observers.

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        March 2024 IASB meeting agenda posted

        08 Mar 2024

        The IASB has posted the agenda for its next meeting, which will be held in its offices in London on 18–21 March 2024. There are 11 topics on the agenda.

        The Board will discuss the following:

        • Work plan update
        • Post-implementation review of IFRS 9 — Impairment
        • Power purchase agreements
        • Second comprehensive review of the IFRS for SMEs Standard
        • Climate-related and other uncertainties in the financial statements
        • Maintenance and Consistent Application
        • Post-implementation review of IFRS 15 — Revenue from contracts with customers
        • Equity method
        • Management commentary — Project direction
        • Catch-up exposure draft of the 'Subsidiaries without Public Accountability Standard'
        • Rate-reg­u­lated ac­tiv­i­ties

        The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries, as well as observer notes from the meeting on this page as they become available.

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