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News

IFRS - IASB Image

IASB publishes proposed amendment to IFRS 16

Nov 27, 2020

On November 27, 2020, the International Accounting Standards Board (IASB) published an exposure draft "Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16)" that aims at clarifying how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 to the lease liability that arises in a sale and leaseback transaction. Comments are requested by March 29, 2021.

 

Background

The IFRS Interpretations Committee received a submission about IFRS 16 Leases and a sale and leaseback transaction with variable payments that do not depend on an index or rate and came to the conclusion (and the IASB agreed) that it would be beneficial to amend IFRS 16 to specify how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 to the lease liability that arises in the sale and leaseback transaction.

The IASB has now published an exposure draft (ED) of a proposed clarifying amendment.

 

Suggested changes

The IASB proposes in ED/2020/4 Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16) to improve the sale and leaseback requirements in IFRS 16 by specifying how to apply paragraphs 36–38 of IFRS 16 in subsequently measuring the lease liability that arises in a sale and leaseback transaction. Specifically, the ED proposes that a seller-lessee

  • when applying the IFRS 16 requirements for measuring the right-of-use asset and lease liability arising from the leaseback, determines the proportion of the asset sold that relates to the right of use retained by comparing the discounted present value of the expected payments for the lease to the fair value of the asset sold and
  • subsequently measures the lease liability by reducing the carrying amount to reflect the expected payments for the lease.

A seller-lessee would apply the proposed amendment retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, except when such application to sale and leaseback transactions with variable lease payments would be possible only with the use of hindsight.

The amendment would also add two illustrative examples to IFRS 16

Comments on the proposed changes are requested by March 29, 2021.

 

Effective date

The exposure draft does not contain a proposed effective date as the IASB intends to decide on this after exposure. Early application would be permitted.

 

Additional information

 

SASB (Sustainability Accounting Standards Board) Image
IIRC (International Integrated Reporting Committee) Image

IIRC and SASB intend to merge

Nov 25, 2020

On November 25, 2020, the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) have announced their intention to merge into the Value Reporting Foundation, a unified organization intended to provide investors and corporates with a comprehensive corporate reporting framework across the full range of enterprise value drivers and standards.

The merger is aimed at advancing the work of CDP, CDSB, GRI, IIRC and SASB who in September 2020 released a statement of intent to work together towards comprehensive corporate reporting in a comprehensive corporate reporting system.

The press release notes that Value Reporting Foundation will maintain the IIRC integrated reporting framework that describes all relevant value creation topics and the approach to integrating them in corporate reporting while the SASB standards provide the precise definitions of the data that should be reported for these topics in each industry. The framework and the standards will remain complementary tools with the Value Reporting Foundation facilitating the use of both together.

The merger responds to the ever increasing calls from global investors and corporates to simplify the corporate reporting landscape by having a globally aligned reporting system. The press release stresses that the Value Reporting Foundation, which will be formed by mid-2021, stands ready to work with the IFRS Foundation, IOSCO, EFRAG, CDP, CDSB, and GRI, and others to work towards a set of global and globally accepted standards.

Review the press release on the SASB’s website (an identical press release is available on the IIRC website).

IFRS - IASB Image

IFRS Foundation publishes proposed IFRS Taxonomy update

Nov 24, 2020

On November 24, 2020, the International Accounting Standards Board (IASB) published PTU/2020/5 "IFRS Taxonomy 2020 — General Improvements and Common Practice — IAS 19, Employee Benefits". Comments are requested by January 26, 2021.

The proposed update includes elements to reflect common reporting practice and new and amended labels to clarify the accounting meaning and intended use of some existing elements.

Review the press release and proposed update on the IASB’s website.

Leaf - sustainability (green) Image
IFRS - IASB Image

Educational material on applying IFRS Standards to climate-related matters

Nov 20, 2020

On November 20, 2020, the IFRS Foundation released a publication that shows how existing IFRS requirements require companies to consider climate-related matters when their effect is material to the financial statements.

The publication mainly consists of a non-exhaustive list of examples illustrating when IFRS Standards may require companies to consider the effects of climate-related matters in applying the principles in a number of standards.

The examples in the list refer to the following standards:

  • IAS 1, Presentation of Financial Statements
  • IAS 2, Inventories
  • IAS 12, Income Taxes
  • IAS 16, Property, Plant and Equipment and IAS 38 Intangible Assets
  • IAS 36, Impairment of Assets
  • IAS 37, Provisions, Contingent Liabilities and Contingent Assets and IFRIC 21, Levies
  • IFRS 7, Financial Instruments: Disclosures
  • IFRS 9, Financial Instruments
  • IFRS 13, Fair Value Measurement
  • IFRS 17, Insurance Contracts

The publication also notes that in addition to the specific requirements outlined in the table, IAS 1 contains some overarching requirements that could be relevant when considering climate-related matters.

In an article published in November 2019, IASB Board member Nick Anderson had already explained how IFRS requirements can be used to report on climate and other emerging risks.

Review the press release and Effects of climate-related matters on financial statements on the IASB's website.

IFRS - IASB Image

Updated IASB work plan — Analysis (November 2020 meeting)

Nov 20, 2020

On November 20, 2020, the International Accounting Standards Board (IASB) updated its work plan following its November 2020 meeting.

Below is an analysis of all changes made to the work plan since our last analysis on October 31, 2020.

Standard-setting projects

  • Disclosure initiative — Subsidiaries that are SMEs — the decision of whether to issue a discussion paper or an exposure draft is now expected in January 2021 (previously December 2020)
  • Management commentary — the issuance of an exposure draft is now expected in the second quarter of 2021 (previously first half of 2021)
  • Rate-regulated activities — the issuance of an exposure draft is now expected in January 2021 (previously first quarter of 2021)

Maintenance projects

Research projects

  • Dynamic risk management — the feedback on the core model is expected to be discussed in the second quarter of 2021 (previously first half of 2021)
  • Extractive activities — a decision on the project direction is now expected in the first quarter of 2021 (previously first half of 2021)
  • Post-implementation review of IFRS 9 — newly added to the work plan; next step in the project will be the issuance of a request for information (no date given)

Other projects

  • IFRS Taxonomy Update — Amendments to IAS 1, IAS 8 and IFRS Practice Statement 2 — the issuance of a proposed IFRS Taxonomy Update is now expected in the first quarter of 2021 (previously December 2020)
  • IFRS Taxonomy Update — Common practice (IAS 19)the expected date for the issuance of a proposed IFRS Taxonomy Update has been dropped, however, the IASB announced in a press release that the proposed IFRS Taxonomy Update will be issued on 24 November 2020
  • IFRS Taxonomy Update — Interest Rate Benchmark Reform — Phase 2 — the feedback on the proposed IFRS Taxonomy Update has been discussed and a final IFRS Taxonomy Update is now expected in December 2020

The revised IASB work plan is available on the Board's website.

Securities - OSC Image

OSC publishes 2020 Corporate Finance Branch Report

Nov 19, 2020

On November 19, 2020, the Ontario Securities Commission (OSC) published its annual Corporate Finance Branch Report, an important resource to help issuers and their advisors comply with their reporting obligations. Due to the ongoing impact of the COVID-19 pandemic, the report also provides issuers with guidance on additional considerations related to the impact of COVID-19.

The report provides issuers with guidance on trends and issues identified during compliance reviews. Key areas of focus in fiscal 2020 included MD&A disclosure, mining technical reports, the use of non-GAAP financial measures, forward-looking information and executive compensation. The report also outlines the Branch’s operational and policy work.

In addition, the report provides an update on the progress made on reducing burden for issuers, a key focus for the OSC. To date, eight of the 13 burden reduction recommendations for issuers have been completed and many of the remaining recommendations are on target for their estimated completion date. Key recommendations completed in 2020 include a program that allows issuers to file an entire prospectus confidentially for staff review and the adoption of a pre-filing review for mining reporting issuers seeking staff views on certain technical disclosure documents.

Review the press release and OSC Staff Notice 51-731 Corporate Finance Branch 2020 Annual Report on the OSC's website.

IFRS - IASB Image
Leaf - sustainability (green) Image

Recordings of the webinars on Trustees' sustainability consultation

Nov 18, 2020

On November 18, 2020, the Trustees of the IFRS Foundation released two webinars and moderated Q&As on their sustainability consultation launched in September.

The consultation is intended to assess demand for global sustainability standards and what role the Foundation might play in the development of such standards.

Review the press release and access the recordings on the IASB's website. The introductory part in both sessions is the same, the questions put forward by the audience differ.

IFRS - IASB Image

IASB officially adds Post-implementation Review of IFRS 9 to its work plan

Nov 18, 2020

On November 18, 2020, the International Accounting Standards Board (IASB) announced that it has started its post-implementation review (PIR) of the classification and measurement requirements in IFRS 9, "Financial Instruments".

At its October 2020 meeting, the Board decided unanimously to separate the PIR of the IFRS 9 classification and measurement requirements (including FVOCI equity instruments) from the PIR of the rest of IFRS 9 and to start the PIR on classification and measurement as soon as possible.

One argument brought forward for a separation of classification and measurement was that this part of IFRS 9 did not have a transition resource group (TRG) and thus application issues have not been addressed since publication of the standard. It was also noted that there is not much overlap between classification and measurement and the rest of IFRS 9, so the PIRs can be done separately.

Review the press release on the IASB's website.

IESBA (International Ethics Standards Board for Accountants) (lt gray) Image

IESBA releases new role and mindset fact sheet

Nov 18, 2020

On November 18, 2020, the International Ethics Standards Board for Accountants (IESBA) released a new Fact Sheet providing an overview of the Board's recently released revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to better promote the role and mindset expected of all professional accountants.

The Role and Mindset Revisions, released in early October, explicitly recognize that the accountancy profession is entrusted with public confidence in the wide-ranging roles it plays in society and that such confidence is based on the skills and values it brings to its professional activities. Importantly, they reaffirm the profession’s responsibility to act in the public interest and the fundamental role of the Code in meeting that responsibility.

Review the press release and fact sheet on the IESBA's website.

IAASB - Assurance Image

Video introduction to the new IAASB Quality Management Standards

Nov 18, 2020

On November 18, 2020, the International Auditing and Assurance Standards Board (IAASB) published video introductions to the new and revised quality management standards in English, French and Spanish. The videos explain the key aspects of the three standards to help stakeholders begin their implementation efforts.

The IAASB recently approved the suite of new and revised quality management standards, which will be released following approval from the Public Interest Oversight Board of the due process later this year. The new and revised quality management standards will become effective on December 15, 2022.

Review the press release and watch the videos on the IAASB's website.

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