Part I - IFRS

ISSB success also requires action by others

May 18, 2022

On May 18, 2022, the IFRS Foundation’s International Sustainability Standards Board (ISSB) published a summary of the necessary steps required to establish a comprehensive global baseline of sustainability disclosures.

The announcement highlights that the ISSB’s global baseline presents a unique opportunity to reduce the existing and further fragmentation of sustainability disclosure requirements and that widespread use of the baseline will reduce the costs for data preparers and improve information usability for data users. It also outlines the steps the ISSB has taken, and is taking, to have completed by the end of 2022 the necessary institutional and technical standard-setting work to establish the core elements of the global baseline. Nevertheless, the announcement also stresses that achieving this goal will require actions by others, in particular by jurisdictional authorities and market participants. It states:

Once in place, the future success of the global baseline will depend on combined action by public authorities to incorporate it into their jurisdictional reporting requirements, and market demand through investors and others encouraging use of the ISSB’s IFRS Sustainability Disclosure Standards. The ISSB reaffirmed its commitment to work collaboratively with jurisdictions and stakeholders in pursuit of this public interest objective and is poised to engage proactively as jurisdictions and other stakeholders begin their evaluation of the ISSB’s standards.

Review the full announcement on the IFRS Foundation's website.

FRC publishes thematic review findings on discount rates

May 17, 2022

The UK Financial Reporting Council (FRC) published a thematic review on discount rates used under IFRS Standards.

The report notes that while discounted cash flows and discount rates are commonly used under IFRS, determining an appropriate discount rate is a complex area of financial reporting and can be an area of significant estimation uncertainty and a source of errors in financial reporting. 
The FRC’s review found:

  • Assumptions used for discount rates and cash flows should be internally consistent, and care should be taken to avoid double-counting risks. When nominal rates are used, the effects of inflation on the cash flows should not be overlooked; particularly in the current interest rate environment of low nominal interest rates and relatively high inflation.
  • There is general scope for improvement in the usefulness of the disclosures provided by many companies, with high quality disclosures including both the discount rate used, and an explanation of how it was determined.
  • Companies may need to consider whether specialist third party advice is required when valuing a material item, and where there is no internal expertise.

The review includes some case studies, based on issues the FRC finds in its routine monitoring of corporate reporting, to illustrate some of the challenges which companies may face in this area.
To encourage improvement in the general quality of company disclosures, the review also includes examples of good practice where companies have clearly described the factors they considered in determining the discount rate; for example, explaining whether  risk and inflation were included in the cash flows or the discount rate.
Read the full review on the FRC's website.

IASB issues May 2022 'Investor Update' newsletter

May 16, 2022

On May 16, 2022, the International Accounting Standards Board (IASB) issued the latest edition of its newsletter "Investor Update", which profiles recently introduced IFRS Standards and other changes that are in the pipeline as well as how those changes may affect companies and performance.

This issue features:

  • In profile — Dr Kenneth Lee, Associate Professorial Lecturer at the London School of Economics and Political Science, member of the Capital Markets Advisory Committee
  • We need your views — IFRS Sustainability Disclosure Standards
  • Stay up to date
  • Resources for investors

Review the Investor Update newslet­ter on the IFRS Foundation’s website.

IPSASB consultation paper on natural resources

May 16, 2022

On May 16, 2022, the International Public Sector Accounting Standards Board (IPSASB) issued a consultation paper "Natural Resources".

The introduction to the consultation paper notes that natural resources are generally understood to be resources such as sunlight, air, water and land that exist without the actions of humankind. They account for a significant proportion of the economic resources in many jurisdictions. However, governments often lack sufficient information on the monetary value of natural resources, and as a result, grant rights to these resources without regard to financial and environmental sustainability, or intergenerational fairness.

Currently, there is no explicit International Public Sector Accounting Standard (IPSAS) guidance on accounting for natural resources in their original state. Therefore, the IPSASB is now working to address this gap. The first phase of its work focuses on the financial reporting of tangible, naturally occurring resources, including subsoil resources, water, and living resources, which are in their natural state. This consultation paper is the first project output, and considers whether natural resources can be recognized as assets in general purpose financial statements or should be disclosed in broader financial reports.

Comments on the consultation paper are requested by October 17, 2022.

Review the press release and the consultation paper, video introduction and an At a Glance summary on the IPSASB's website.

IPSASB launches global consultation on public sector sustainability reporting

May 09, 2022

On May 9, 2022, the International Public Sector Accounting Standards Board (IPSASB) issued a consultation paper "Advancing Public Sector Sustainability Reporting".

The introduction to the consultation paper argues that while there has recently been significant progress towards the development of a global baseline for sustainability reporting in the private sector, public sector sustainability reporting has yet to move forward in the same way. At the same time, the paper goes on to state, governments are significant in expenditure and employment terms in all jurisdictions, as well as in the global bond market. How and where they spend the money they raise through the taxes everyone pays will therefore be critical in successfully delivering the United Nation’s Sustainable Development Goals.

The consultation paper now released proposes the IPSASB:

  • serve as the standard setter for global public sector specific sustainability guidance, drawing upon its experience, processes, and global relationships;
  • develop initial guidance focused on general disclosure requirements for sustainability-related information and climate-related disclosures; and
  • approach guidance development at an accelerated pace, with a potential for releasing initial guidance by the end of 2023.

Comments on the consultation paper are requested by September 9, 2022.

Review the press release and consultation paper, consultation overview, video introduction and an At a Glance summary on the IPSASB's website.

Recordings of recent webinars on ISSB’s exposure drafts now available

Apr 29, 2022

On April 29, 2022, the IFRS Foundation posted the recording of its recent webinars on the ISSB’s proposed IFRS Sustainability Disclosure Standards.

The webinars lasted ap­prox­i­mately 60 minutes and discuss the following:

Review the press release on the IFRS Foundation's website.

AcSB 2022-2027 Strategic Plan Feedback Statement

Apr 29, 2022

On April 29, 2022, the Accounting Standards Board (AcSB) released its 2022-2027 Strategic Plan, which includes conclusions reached on the significant comments received during our consultation process.

Review the press release on the AcSB's website.

Updated IASB and ISSB work plan — Analysis (April 2022)

Apr 29, 2022

On April 29, 2022, the International Accounting Standards Board (IASB) updated its work plan following its April 2022 meeting. The work plan now also lists the projects of the ISSB.

Below is an analysis of all changes made to the work plan since our last analysis on March 28, 2022.

Standard-setting projects

  • Climate-related disclosures An ISSB project newly added to the workplan; feedback on the exposure draft will be discussed in H2 2022
  • Disclosure initiative — Subsidiaries without public accountability: Disclosures — The IASB has now discussed the feedback to the exposure draft; the next project step will be a decision on the project direction expected in June 2022
  • General sustainability-related disclosures An ISSB project newly added to the workplan; feedback on the exposure draft will be discussed in H2 2022
  • Management commentary — The IASB has now discussed the feedback to the exposure draft; the next project step will be a decision on the project direction (no date given)
  • Second comprehensive review of the IFRS for SMEs An exposure draft is now expected in Q3 2022 (previously H2 2022)

Maintenance projects

Research projects

Other projects

  • no changes

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

ISSB forms working group to enhance compatibility between global baseline and jurisdictional initiatives

Apr 27, 2022

On April 27, 2022, the International Sustainability Standards Board (ISSB) formed a working group comprised of several jurisdictions to enhance the compatibility between the ISSB’s exposure drafts on sustainability disclosures and jurisdictional initiatives.

Specifically, the working group will “discuss compatibility of those initiatives to establish how the global baseline, fully responding to the needs of global market participants, can contribute to optimizing reporting efficiency for companies in those jurisdictions and how those jurisdictions can build upon the global baseline according to their needs.”

The working group consists of members from the Chinese Ministry of Finance, the European Commission, the European Financial Reporting Advisory Group, the Japanese Financial Services Authority, the Sustainability Standards Board of Japan Preparation Committee, the United Kingdom Financial Conduct Authority and the US Securities and Exchange Commission.

Review the press release on the IFRS Foundation’s website.

IASB issues project summary on pension benefits that depend on asset returns project

Apr 26, 2022

On April 26, 2022, the International Accounting Standards Board (IASB) published its project summary "Pension Benefits that Depend on Asset Returns". The project summary provides an overview of research and deliberations on the project.

Following the 2015 Agenda Consultation, the Board has been considering whether to propose amendments to IAS 19 for pension benefits that depend on the return on a specified pool of assets (reference assets). The pension benefits to be paid to employees reflect the variability inherent in the reference assets, yet IAS 19 requires a discount rate that reflects high-quality corporate bonds. Applying the IAS 19 discount rate can overstate the pension liability, producing information that is not relevant to users of financial statements. At the IASB meeting in October 2021, the staff recommended the Board propose that an entity estimate the ultimate cost of providing pension benefits that vary with asset returns applying the IAS 19 discount rate, but only when the IAS 19 discount rate is lower than the expected rate of return on the reference assets. Only 5 IASB members voted to continue the project and therefore the project will be stopped. All Board members supported the staff recommendation to consider any further work as part of the Third Agenda Consultation.

Review the press release on the IFRS Foundation’s website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.