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November 2020

AcSB endorses amendments

Nov 02, 2020

On November 2, 2020, the Accounting Standards Board (AcSB) endorsed amendments to IFRS 17 and extension of the temporary exemption from applying IFRS 9 (Amendments to IFRS 4)

The amendments are now in Part I of the CPA Canada Handbook – Accounting. The amendments include deferring the effective date of IFRS 17, Insurance Contracts to January 1, 2023 and extending the temporary exemption of applying IFRS 9, Financial Instruments by two years to keep the effective dates aligned.

Review the effective dates for new standards on the AcSB's website.

Chairman of the IFRS Foundation Trustees presents sustainability consultation paper at ISAR 37, engages in panel discussion

Nov 05, 2020

On November 5, 2020, the International Accounting Standards Board (IASB) released a speech by Erkki Liikanen, Chairman of the IFRS Foundation Trustees, given at the thirty-seventh session of the United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR). Mr. Liikanen introduced the Trustees' consultation paper that was published in September to assess demand for global sustainability standards and what role the Foundation might play in the development of such standards.

During the introduction of the consultation paper Mr. Liikanen noted that when the challenges are global, the most optimal solution would be global. He explained that there have calls for the IFRS Foundation to play a role in this area as the Foundation has a well-established model of global standard-setting, working in close cooperation with both public and private stakeholders.

The presentation was followed by a lively panel discussion on "Climate-related financial disclosures in mainstream entity reporting: Good practices and key challenges", that among other speakers saw participation of representatives of TCFD, CDSB, CDP, and UNEP FI.

Review the following additional information:

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.

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.

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

 

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.

Recordings of the second webinar on the goodwill and impairment DP

Nov 06, 2020

On November 6, 2020, the International Accounting Standards Board (IASB) made available the recordings of the recent second webinar on the goodwill and impairment discussion paper.

The webinar introduced in more detail the Board’s preliminary views about improving disclosures about acquisitions.

Listen to the recordings on the IASB's website.

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.

Summary of the October 2020 ASAF meeting now available

Nov 03, 2020

On November 3, 2020, the International Accounting Standards Board (IASB) staff published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held via remote participation on October 2, 2020.

The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

  • Goodwill and impairment (1–9): The ASAF discussed the initial feedback on the discussion paper from their stakeholders, and how that feedback compared to what the Board has heard so far. In addition, the ASAF members outlined their plans for outreach and fieldwork to stimulate feedback to the discussion paper.
  • Business combinations under common control (10–15): The ASAF was given an update on the outreach plans for the forthcoming discussion paper. The ASAF members provided feedback on the proposed focus in the outreach, stakeholder events in their jurisdictions, and on how to facilitate effective stakeholder engagement.
  • Conceptual Framework for Financial Reporting (16–19): The FASB provided an overview of its proposed Chapter 4 Elements of Financial Statements of FASB Concepts Statement No. 8 Conceptual Framework for Financial Reporting.
  • Update and agenda planning (20–23): The ASAF members discussed the Board’s current work plan and planned topics for the December 2020 ASAF meeting.

Review the full summary of the meeting on the IASB's website.

Trustees appoint Andreas Barckow to succeed Hans Hoogervorst

Nov 12, 2020

On November 12, 2020, the Trustees of the IFRS Foundation, the oversight body of the International Accounting Standards Board (IASB), announced the appointment of Prof Dr. Andreas Barckow as next chair of the IASB.

Dr. Barckow, currently the President of the Accounting Standards Committee of Germany (ACSG), will succeed Hans Hoogervorst on his retirement as chair of the IASB at the end of June 2021.

Dr. Barckow, a former Deloitte Partner, has been an active participant in numerous advisory bodies to the IFRS Foundation and the IASB, including membership of the IASB’s Accounting Standards Advisory Forum (ASAF) and the IFRS Advisory Council, and is a highly recognized expert on IFRSs at national, European and international level. He will step down from all his present positions in order to join the IASB.

Review the press release on the IASB's website.

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.

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