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December 2020

AcSB Exposure Draft – Lease Liability in a Sale and Leaseback

Dec 09, 2020

On December 9, 2020, the Accounting Standards Board (AcSB) issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by March 29, 2021.

The AcSB would like input from Canadian respondents on the following additional question regarding the proposed amendments:

  • The IASB has developed the proposed amendments in accordance with its due process for application around the world. Assuming the Exposure Draft proposals are finalized and approved by the IASB in accordance with its due process, do you think that the proposals are appropriate for application in Canada? If not, please specify which aspects of the proposals, and what circumstances, make the accounting requirements proposed in the Exposure Draft inappropriate.

Review the press release and exposure draft on the AcSB's website.

Creation of new IFRS SSB

Dec 15, 2020

Mark Carney, UN Special Envoy for Climate Action and Finance, has commented on the IFRS Foundation Trustees' sustainability consultation and stresses that he endorses the creation of new IFRS Sustainability Standards Board (SSB).

In September 2020, the Trustees of the IFRS Foundation published a consultation paper to assess demand for global sustainability standards and, if demand is strong, assess whether and to what extent the Foundation might contribute to the development of such standards. The paper noted the option of creating the SSB. The new board could operate alongside the IASB under the same three-tier governance structure, build on existing developments, and collaborate with other bodies and initiatives in sustainability, focusing initially on climate-related matters.

In his letter, Mr. Carney notes:

The IFRS Foundation has an essential role to play in making this vision a reality, and I fully endorse your proposal for a new Sustainability Standards Board under the Foundation’s remit. The Foundation, with its track record of robust, reliable and independent global standard-setting should play a pivotal role in delivering sustainability reporting standards that are in the public interest.

Review the full letter on the IASB's website.

IASB Chair discusses COVID-19 and IFRS Standards

Dec 16, 2020

On December 16, 2020, during the virtual seminar hosted by the Japanese Institute of Certified Public Accountants, IASB Chair Hans Hoogervorst gave a keynote speech discussing the effects of COVID-19 as well as developments in IFRS Standards.

Mr. Hoogervorst commented on the work done during the coronavirus pandemic which included the publishing of educational materials to support the application of IFRS 9, Financial Instruments, and IFRS 16, Leases and changes to the IASB’s work plan to give stakeholders more time on consultations.

Next, he reflected on the key developments of the past 10 years as the IASB Chair. These developments included the revised Conceptual Framework, primary financial statements project, issuance of major standards (IFRS 9, IFRS 15, IFRS 16 and IFRS 17), and progress in the adoption of IFRS Standards around the world. He then touched upon the IASB’s future plans that will include a focus on sustainability, goodwill, and the agenda consultation.

Review the full transcript of the speech on the IASB’s website.

IASB issues “Investor Update” newsletter

Dec 16, 2020

On December 16, 2020, the International Accounting Standards Board (IASB) issued the latest edition of its newsletter "Investor Update", which profiles recently introduced IFRS Standards and other changes to the pipeline as well as how those changes may affect companies and performance.

This issue features:

  • Spotlight — Reflecting on the financial reporting challenges stemming from COVID-19.
  • In Profile — Florian Esterer, Head of Core Equities, Bank J Safra Sarasin and member of the Capital Markets Advisory Committee
  • We need your views
  • Stay up to date
  • Resources for investors

Review the Investor Update newslet­ter on the IASB’s website.

IASB publishes request for information on the post-implementation review of IFRS 10, IFRS 11 and IFRS 12

Dec 09, 2020

On December 9, 2020, the International Accounting Standards Board (IASB) issued a request for information (RFI) seeking comments from stakeholders to identify whether IFRS 10, "Consolidated Financial Statements", IFRS 11, "Joint Arrangements", and IFRS 12, "Disclosure of Interests in Other Entities" provide information that is useful to users of financial statements; whether there are requirements that are difficult to implement and may prevent the consistent implementation of the standards; and whether unexpected costs have arisen in connection with applying or enforcing the standards. Comments are requested by May 10, 2021.

The post-implementation review process for IFRS 10, IFRS 11, and IFRS 12 was officially added to the IASB's agenda in September 2019. The IASB has been gathering information to determine the scope of the review and to identify the main questions that need to be answered before the implementation of IFRS 10, IFRS 11, and IFRS 12 can be assessed.

The information gathered so far indicates that many stakeholders believe that the standards work, however, IASB stakeholders have also indicated that there are areas where the standards to their mind might still benefit from improvements. Based on this feedback, the Board agreed the following matters be examined further in the RFI:

IFRS 10 Consolidated Financial Statements provides a single consolidation model that identifies control as the basis for consolidation for all types of entities. The following areas might warrant further investigation:

  • power over an investee, including relevant activities, rights that give an investor power over an investee and control without a majority of voting rights;
  • the link between power and returns, including principal and agent and non-contractual agency relationships;
  • investment entities, including criteria for identifying an investment entity and subsidiaries that are investment entities; and
  • accounting requirements for
    • transactions that give rise to a change in ownership; and
    • the partial acquisition of a subsidiary that does not constitute a business.

IFRS 11 Joint Arrangements establishes a principle-based approach for the accounting for joint arrangements, in which the parties recognize their rights and obligations arising from the arrangements. The following areas might warrant further investigation:

  • collaborative arrangements outside the scope of IFRS 11;
  • classification of joint arrangements; and
  • accounting requirements for joint operations.

IFRS 12 Disclosure of Interests in Other Entities combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. There were relatively few comments on IFRS 12 requirements and feedback was mixed. Therefore, the RFI aims to establish to what extent the requirements assist an entity to meet the objective of the standard.

After the comment period ends, the IASB will consider the comments received along with information gathered through other consultation activities. The final conclusions of the IASB will be presented in a report and a feedback statement which will also set out the steps the IASB believes should be taken as a result of the review. The Board could decide to add a standard-setting project to its agenda, consider one or more matters further as part of its research programme, or both. The Board could also decide to take no action.

Review the press release and request for information on the IASB's website.

IASB Vice-Chair speaks at annual AICPA conference

Dec 08, 2020

On December 8, 2020, the International Accounting Standards Board (IASB) released a speech by IASB Vice-Chair Sue Llyod given at the 2020 AICPA Conference on Current SEC and PCAOB Developments, held by remote participation. In her speech, Ms. Llyod spoke about the IASB's reaction to COVID-19 challenges and other important Board developments in 2020. She also noted developments to be expected next year and developments in sustainability reporting.

On COVID-19, Ms. Lloyd noted that the IASB's approach to dealing with the effects of the pandemic was similar to the FASB’s approach. The IASB published educational material to explain how to apply the existing requirements in IFRSs in the context of COVID-19 and issued one small amendment to IFRS 16. The IASB also reconfigured its work plan to allow for the extra demands that have been put on the stakeholders.

Regarding other important Board developments in 2020, Ms. Lloyd pointed out that the IASB finalized amendments to IFRS 17, completed important changes to several standards in response to the IBOR reform, and launched two important consultations — on primary financial statements and on goodwill and impairment.

As an example of important developments to be expected next year, Ms. Llyod noted the agenda consultation the IASB will launch in early 2021. She especially encouraged responding to the consultation as this is an important opportunity for the stakeholders to tell the IASB which standard-setting projects they think are important for the IASB to consider and how the IASB should prioritize its work.

Lastly, Ms. Lloyd discussed developments in sustainability reporting and pointed at the Trustees' consultation paper published to assess demand for global sustainability standards and, if demand is strong, to assess whether and to what extent the IFRS Foundation might contribute to the development of such standards.

Review the full speech on the IASB's website.

ICAS report on IAS 37 and decommissioning liabilities

Dec 10, 2020

The Institute of Chartered Accountants of Scotland (ICAS) released a report examining the application of IAS 37, "Provisions, Contingent Liabilities and Contingent Assets" in accounting for the costs of decommissioning and clean-up operations in polluting industries, including oil and gas, mining and utilities.

IAS 37 mandates that the future cost of clean-up be estimated and accounted for using an appropriate discount rate to calculate the present value of these costs. However, the standard does not mandate for businesses to disclose the rate they have used, nor makes clear whether the basis for calculating the discount rate should be an accounting choice.

The ICAS research used a large international sample across the mining, utilities, and oil and gas sectors, and found substantial variations exist in companies’ choice to disclose the discount rate when accounting for decommissioning and environmental liabilities. Furthermore, the research notes that when a company with a decommissioning liability becomes insolvent the clean-up liability remains attached to the asset, which may therefore become less attractive to a potential buyer, and so, if eventually the asset remains unsold, the taxpayer ends up picking up the decommissioning tab. ICAS points out that this scenario is likely to be more frequent in a post-COVID world.

The report arrives at two recommendations:

  • Standard setters should require disclosing the discount rates applied to facilitate comparability and thus allow for users of financial statements and other key stakeholders to see inside the ‘black box’ of accounting for decommissioning liabilities; and
  • Preparers should include, and auditors demand, enhanced disclosures, to include not only the discount rate but also undiscounted future estimated cash flows and timing of decommissioning activities, augmented by a comprehensive narrative on the major uncertainties surrounding these items.

Review the report Black Box Accounting: Discounting and disclosure practices of decommissioning liabilities on the ICAS website.

IFRS Foundation publishes IFRS Taxonomy update

Dec 17, 2020

On December 17, 2020, the IFRS Foundation published "IFRS Taxonomy 2020 — Update 2 Interest Rate Benchmark Reform — Phase 2''.

This Taxonomy update includes elements to reflect the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 introduced by Interest Rate Benchmark Reform — Phase 2 issued in August 2020.

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

Updated IASB Work Plan — Analysis (December 2020 Meeting)

Dec 18, 2020

Following the IASB's December 2020 meeting, we have analyzed the IASB work plan to see what changes have resulted from the meeting and what other de­vel­op­ments have occurred since the work plan was last revised in November 2020.

Below is an analysis of all changes made to the work plan since our last analysis on November 20, 2020.  

 Stan­dard-set­ting projects

 Main­te­nance projects

 Research projects

  • Business com­bi­na­tions under common control — a dis­cus­sion paper was published on November 30, 2020 and the feedback on the dis­cus­sion paper is expected to be discussed in the second half of 2021.
  • Ex­trac­tive ac­tiv­i­ties— a decision on the project direction is now expected in the second quarter of 2021 (pre­vi­ously first quarter of 2021).
  • Pension benefits that depend on asset returns — the review of the research was first discussed at the IASB's December 2020 meeting and detailed analysis is expected in February 2021.
  • Post-im­ple­men­ta­tion review of IFRS 10, IFRS 11 and IFRS 12— the request for in­for­ma­tion was published on December 9, 2020 and dis­cus­sion of the feedback is expected to begin in the second half of 2021.
  • Post-im­ple­men­ta­tion review of IFRS 9 — Clas­si­fi­ca­tion and Mea­sure­ment— the request for in­for­ma­tion is expected in the second half of 2021 (previously not specified).
  • Second com­pre­hen­sive review of the IFRS for SMEs Standard — this is the new name of the 2019 Com­pre­hen­sive Review of the IFRS for SMEs Standard project, which has also been re­cat­e­gorized from main­te­nance project to research project; after the IASB's dis­cus­sion of the feedback to the request for in­for­ma­tion at its December 2020 meeting, a decision on the direction of the project expected in the first quarter of 2021.

 Other projects

The above is a faithful com­par­i­son of the IASB work plan at November 20, 2020 and December 18, 2020. For access to the current IASB work plan at any time, please click here.

 

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