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March 2021

2021 IFRS XBRL taxonomy issued

Mar 24, 2021

On March 24, 2021, the IFRS Foundation issued its 2021 IFRS Taxonomy. The IFRS Taxonomy is a translation of IFRS Standards into XBRL (eXtensible Business Reporting Language).

The IFRS Taxonomy 2021 is consistent with IFRS Standards as issued by the IASB at January 1, 2021, including those issued but not yet effective.

The IFRS Taxonomy 2021 also incorporates the six updates made to the IFRS Taxonomy in 2020 reflecting amended IFRSs and providing new common practice elements.

Review the press release and IFRS Taxonomy 2021 page on the IASB's website.

AcSB Exposure Draft – Regulatory Assets and Regulatory Liabilities

Mar 15, 2021

On March 15, 2021, the Accounting Standards Board (AcSB) issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by June 30, 2021.

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

The IASB has developed the proposed standard 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 exposure draft on the AcSB's website.

AcSB Response – COVID-19-Related Rent Concessions beyond June 30, 2021 (Proposed Amendment to IFRS 16)

Mar 02, 2021

On March 2, 2021, the Accounting Standards Board (AcSB) released the comment letter it submitted responding to the IASB’s Exposure Draft issued in February 2021.

The letter agrees with the proposal to extend the relief related to COVID-19 related rent concessions and suggests factors to consider when selecting the extension timeframe. The letter also suggests that the transition provisions provide more flexibility.

Review the full letter.

Appointments – AcSOC, the AcSB and PSAB

Mar 15, 2021

On March 15, 2021, the Accounting Standards Oversight Council (AcSOC) announced new members and re-appointed members to the AcSOC, the AcSB and PSAB.

Here are the new appointments from Deloitte Canada:

AcSOC appointments

  • Shelley Brown, FCPA, FCA, ICD.D, Partner (ret.), Deloitte Canada

AcSOC announces new PSAB appointments

Appointed as a member for a three-year term ending on March 31, 2024:

  • Jennifer Teoh, CPA, CA, Senior Manager, Accounting and Reporting Advisory, Deloitte Canada

Review the announcement on the AcSOC's website.

IASB Chair's farewell speech to IFASS members

Mar 09, 2021

On March 9, 2021, the spring meeting of the International Forum of Accounting Standard Setters (IFASS) concluded with a farewell speech of IASB Chair Hans Hoogervorst to his fellow standard setters.

Mr. Hoogervorst began his speech with some quips about departing presidents and his intention to leave peacefully. In fact, he noted, there was no need for an armed insurrection of angry national standard-setters as his designated successor, Andreas Barckow, is the former Chair of the German standard-setter and thus really understands what national standard-setters need from the IASB - an insider so to say.

Mr. Hoogervorst then looked back over his ten years as Chairman. He noted he was truly proud of what the IASB has achieved during that time: completing reforms following the global financial crisis and delivering major improvements to financial instruments accounting, to revenue recognition and to lease accounting — often in the face of fierce lobbying. In his second term, the IASB focused on improvements to presentation. Not all projects of that phase are finished yet, but all of them delivered or promise progress at making disclosures more relevant.

While mentioning big standards and adoption of IFRSs around the world, Mr. Hoogervorst could not help but comment on the adoption of IFRS 17 in Europe and that some parties still hope to limit the scope of the annual cohorts requirement that are intended to insure that contracts cannot continue contributing to profits long after they have expired. His questions were:

  • Is it really worth it?
  • Will European insurers really look good if they apply a carve-out that most investors will view as a short-cut that distorts performance?
  • Is it in the interests of the industry itself to lose the full benefits of applying the same standard across the world?

A bracket around Mr. Hoogervorst's speech were the crises at the beginning at the end of his chairmanship. He joined  the IASB with little experience with accounting at a time when the accounting for financial instruments came under attack during the financial crisis. He noted that people were pointing the finger at accounting when the blame was really much closer to home. At that time he was convinced that the criticism of accounting was a typical case of shooting the messenger. Mr. Hoogervorst noted that during the COVID-19 crisis and recession the state of the global economy is even more perilous that ten years earlier with debt exploding around the world. He stated that he would not be surprised if accounting comes under pressure again, as it did in 2008, when the economic stress that has been building up finally erupts. But, he noted, that is exactly the point when proper accounting matters the most.

Concluding his speech Mr. Hoogervorst thanked the national standard setters and stressed that IFASS was a wonderful example of what can be achieved when highly skilled people from around the globe work together to solve common challenges, which was even more impressive given the anti-globalization backdrop of the last five years where a politically expedient solution is often valued above the right accounting solution. He asked the standard setters to continue to stand up for independent standard-setting and to give his successor and his team the same support they have given him in the last decade.

Review the transcript and a recording of the speech on the IASB's website.

IASB decides to extend the practical relief regarding COVID-19-related rent concessions

Mar 10, 2021

On March 10, 2021, in a supplementary meeting, the IASB considered the feedback received on the February 2021 exposure draft "Covid-19-Related Rent Concessions beyond June 30, 2021 (Proposed amendment to IFRS 16)" and decided to finalize the proposed extension of the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification by one year.

During the meeting, the staff presented an analysis of the feedback received that showed that almost all respondents supported the Board's proposals in the exposure draft. The only change the staff recommended as a result of its analysis of the feedback was an additional explanatory transition paragraph.

Main points raised during the Board's discussion were the fact that IFRS 16 is not a new standard anymore so that companies should be able to comply with the requirements; the pandemic is still ongoing; there are differences in magnitude of and general situation in connection with the pandemic around the world; there is a difference between public health and economy; the lack of comparability would be continued; setting an end date to the practical relief will always be arbitrary; does there need to be an end date at all when the reference is clearly to COVID-19 related rent concessions?

When called to vote, the Board

  • agreed with the conclusions the staff had drawn and decided to finalize the proposal in the exposure draft with the one additional explanatory transition paragraph proposed (10 in favour, one absent);
  • agreed with with the conclusion that the amendment to IFRS 16 does not require re-exposure (12 in favour, one absent); and
  • was satisfied that it has complied with the applicable due process requirements and that it has undertaken sufficient consultation and analysis to begin the balloting process for the amendment to IFRS 16 and thus gave permission to do so (12 in favour, one absent).

The same Board member that dissented from publishing the exposure draft also dissented from publishing the final amendments. In addition, one Board member who did express serious doubt when the exposure draft was published, but did not dissent then, now dissented as well.

The staff expects to finalize the amendment by the end of this month so that it can be issued on March 31, 2021 with an effective date of April 1, 2021.

In addition, see the detailed notes taken by Deloitte observers for the meeting.

IASB extends comment period for exposure draft on regulatory assets and regulatory liabilities

Mar 26, 2021

On March 26, 2021, the International Accounting Standards Board (IASB) announced that following its March 23, 2021 meeting, the IASB decided to extend the comment period of Exposure Draft (ED), "Regulatory Assets and Regulatory Liabilities" by 30 days. Comments are now due by July 30, 2021.

Review the press release on the IASB's website.

IASB extends practical relief regarding COVID-19-related rent concessions

Mar 31, 2021

On March 31, 2021, the International Accounting Standards Board (IASB) published "Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)" that extends, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification.

 

Background

In May 2020, the IASB issued Covid-19-Related Rent Concessions (Amendment to IFRS 16). The pronouncement amended IFRS 16, Leases to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. On issuance, the practical expedient was limited to rent concessions for which any reduction in lease payments affects only payments originally due on or before June 30, 2021.

Since lessors continue to grant COVID-19-related rent concessions to lessees and since the effects of the COVID-19 pandemic are ongoing and significant, the IASB decided to extend the time period over which the practical expedient is available for use.

 

Changes

The Changes in Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) amend IFRS 16 to

  1. permit a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before June 30, 2022 (rather than only payments originally due on or before June 30, 2021);
  2. require a lessee applying the amendment to do so for annual reporting periods beginning on or after April 1, 2021;
  3. require a lessee applying the amendment to do so retrospectively, recognizing the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment; and
  4. specify that, in the reporting period in which a lessee first applies the amendment, a lessee is not required to disclose the information required by paragraph 28(f) of IAS 8.

 

Effective date

The amendment is effective for annual reporting periods beginning on or after April 1, 2021 (earlier application permitted, including in financial statements not yet authorized for issue at the date the amendment is issued).

 

Dissenting opinion

The final amendment includes a joint dissenting opinion by Board members Nick Anderson and Zachary Gast. They voted against publication of the final amendments noting that when the practical expedient was initially offered, its application was limited to a very specific timeframe. Extending the period during which the practical expedient is available does further impede comparability between lessees that apply the practical expedient and those that do not. They also note that support from users of financial statements for the original amendment was based on limiting the practical expedient to a specific time frame. In addition, they highlight that lessees are no longer applying IFRS 16 for the first time.

 

Additional information

 

IASB launches third agenda consultation on its future work programme

Mar 30, 2021

On March 30, 2021, the International Accounting Standards Board (IASB) launched its third public consultation to seek broad public input on the strategic direction and overall balance of its future work programme by publishing a request for information. Comments are requested by September 27, 2021.

 

Introduction

The request for information includes an introductory section that states the objective of the request for information and describes how responses will help the Board in determining its future work programme. The introduction also explains the difference between the IFRS Foundation's five-yearly review of structure and effectiveness that is currently underway and that includes a consultation on sustainability reporting and the IASB's agenda consultation. The IASB's agenda consultation seeks feedback on the priorities of activities within the current scope of the Board’s work, whereas the Trustees’ consultation seeks feedback on a potential expansion in the role of the IFRS Foundation. The IASB is currently working on its management commentary project and could do more on sustainability aspects, should stakeholders wish so, as long as this is connected to financial statements. While there is some connecting middle ground, respondents should not confuse the two initiatives. As the IFRS Foundation Trustees move forward quickly with their initiative, their decisions would be available before the Board makes decisions on its future agenda.

 

Request for information

The request for information consists of three parts: (1) strategic direction and balance of the Board's activities, (2) criteria for assessing the priority of projects that could be added to the work plan, and (3) financial reporting issues that could be added to the Board’s work plan.

Strategic direction and balance of the Board's activities

Part one of the request for information regarding the strategic direction and balance notes that the IASB's work is currently following six lines:

  • New IFRS Standards and major amendments to IFRS Standards
  • Maintenance and consistent application of IFRS Standards
  • The IFRS for SMEs Standard
  • Digital financial reporting and the IFRS Taxonomy
  • Understandability and accessibility
  • Stakeholder engagement

In this part of the request for views the IASB is seeking stakeholders’ views on whether the Board should increase, leave unchanged or decrease its current level of focus on each line of work. And while there is a little room for additional work, respondents are asked to assume that the Board’s overall level of resources will remain substantially unchanged during the 2022 to 2026 period.

Criteria for assessing the priority of projects that could be added to the work plan

Part two of the request for information regarding criteria for assessing the priority of projects that could be added to the work plan notes that the Board will use a specified list of seven criteria to assess the potential financial reporting issues that could be added to its work plan to develop new IFRS Standards and major amendments to IFRS Standards. They are:

  • The importance of the matter to investors
  • Whether there is any deficiency in the way companies report the type of transaction or activity in financial reports
  • The type of companies that the matter is likely to affect, including whether the matter is more prevalent in some jurisdictions than others
  • How pervasive or acute the matter is likely to be for companies
  • The potential project’s interaction with other projects on the work plan
  • The complexity and feasibility of the potential project and its solutions
  • The capacity of the Board and its stakeholders to make timely progress on the potential project

The criteria are derived from the Due Process Handbook and the 2015 Agenda Consultation. The relative importance of any specific criterion will vary depending on the particular circumstances. Generally, the Board will evaluate potential project for its work plan primarily on the basis of whether the project will meet investors’ needs, while also taking into account the costs of producing the information.

Financial reporting issues that could be added to the Board’s work plan

Finally, part three of the request for information regarding financial reporting issues that could be added to the Board’s work plan refers to 22 projects that have frequently been suggested to the Board for consideration. The request for information seeks stakeholders’ views on what priority they would give each of the potential projects — high, medium or low — and whether their prioritisation refers to all or only some aspects included in the project description. Respondents are also invited to suggest additional issues that they believe the Board should add to its work plan for 2022 to 2026.

 

Appendices

For reasons of readability, some of the information referred to in the request for information has been relegated to appendices:

  • Appendix A describes the active projects on the Board’s work plan as of March 2021
  • Appendix B describes the 22 financial reporting issues that were frequently suggested to the Board for potential potential inclusion in its work programme
  • Appendix C describes additional financial reporting issues that were suggested to the Board by only a small number of stakeholders

 

Comment deadline and next steps

Stakeholders are invited to provide feedback on the request for information by September 27, 2021. The Board expects to discuss the feedback in the second half of 2021 and to publish a feedback statement summarizing the feedback and announcing the work plan for 2022 to 2026 in the first quarter of 2022.

 

Additional information

Review the following information on the IASB's website:

 

IASB publishes proposed amendments to IFRS 13 and IAS 19 and draft guidance for developing and drafting disclosures

Mar 25, 2021

On March 25, 2021, the International Accounting Standards Board (IASB) published an exposure draft "Disclosure Requirements in IFRS Standards — A Pilot Approach (Proposed amendments to IFRS 13 and IAS 19)" that contains proposed guidance for itself when developing and drafting disclosure requirements in IFRS Standards in future as well as proposed amendments to IFRS 13, "Fair Value Measurement" and IAS 19, "Employee Benefits" that result from applying the proposed guidance to those standards. Comments are requested by October 21, 2021.

 

Background

The IASB noted constituent concern about the cumulative effect of disclosure requirements introduced by new and revised standards and conducted a research project with the aim of a general review of disclosure requirements.

As a first step, the Board published a discussion paper DP/2017/1 Disclosure Initiative — Principles of Disclosure in March 2017 that contained an appendix with two examples of how existing standards could be re-drafted using the principles described in the DP.

Many respondents to the DP highlighted the ‘checklist’ approach as a significant factor contributing to the disclosure problem and that the Board’s way of developing and drafting disclosure requirements in IFRSs is partly responsible for this as there often are a large number of disclosure requirements without specific disclosure objectives. In addition, disclosure sections are drafted inconsistently.

The Board acknowledged these concerns and decided to pursue a project following a four-step approach:

  • Develop draft guidance for the Board to use when developing and drafting disclosure sections;
  • Select two standards on which to apply the draft guidance;
  • Test the draft guidance by applying it to those standards; and
  • Prepare an ED of amendments to those standards.

The exposure draft published today includes the draft guidance as well as proposed amendments to IFRS 13, Fair Value Measurement and IAS 19, Employee Benefits that result from applying the draft guidance to those standards. 

 

Draft guidance and suggested changes

The exposure draft ED/2021/3 Disclosure Requirements in IFRS Standards — A Pilot Approach (Proposed amendments to IFRS 13 and IAS 19) is made up of three blocks: the draft guidance for the IASB to apply when developing and drafting disclosure requirements in IFRSs in future; proposed amendments to IFRS 13; and proposed amendments to IAS 19.

Draft guidance

As one of the main reasons for the perceived disclosure problem was the 'checklist' mentality, the IASB decided to develop an approach that would shift the focus to the use of judgement and to determining whether the objective behind the disclosures has been met by the entity.

To this end, the the Board proposes to use overall disclosure objectives in future that that describe the overall information needs of users of financial statements and specific disclosure objectives that describe the detailed information needs of users of financial statements. An entity would then need to apply judgement to identify items of information for each specific disclosure objective by considering whether the information is relevant or irrelevant and whether it helps the entity to communicate effectively. For the overall disclosure objectives, the IASB would use more prescriptive language, while for the information needed to meet specific disclosure objectives it would typically use less prescriptive language.

The draft guidance is not a standard. However, once finalized, the Board will apply the guidance in developing and drafting disclosure sections of IFRSs in the future. The Board expects that the broad application of the guidance will have a significant effect on the behaviour of entities, auditors and regulators. Instead of checking whether a specific piece of information required by an IFRS has been provided, auditors and regulators will have to use judgement to assess compliance. Compliance will be achieved if the information provided effectively meets the disclosure objectives in the entity’s case.

Proposed amendments to IFRS 13

In line with the draft guidance, the Board proposes an overall disclosure objective that requires an entity to disclose information that shows

  • the significance of the assets and liabilities measured at fair value;
  • how the fair value measurements have been determined; and
  • how changes in those measurements affect the entity’s financial statements.

Specific disclosure objectives would then regard the fair value hierarchy, measurement uncertainties, possible alternative fair value measurements, and drivers of change in fair value measurements. The proposed amendments also note the kind of information needed to meet the disclosure objectives. In addition, the specific disclosure requirements also cover disclosures regarding assets and liabilities not measured at fair value in the statement of financial position but for which fair value is disclosed in the notes.

Proposed amendments to IAS 19

The overall disclosure objectives proposed for IAS 19 distinguish between defined benefit plans and define contribution plans. For defined benefit plans, the overall disclosure objective requires an entity to disclose information that shows enables users of financial statements to evaluate the uncertainties associated with the entity’s involvement in its defined benefit plans and to assess the effect that the defined benefit plans have on the financial performance, financial position and cash flows of the entity. For defined contribution plans, the overall disclosure objective requires requires an entity to disclose information that enables users of financial statements to understand the effect that defined contribution plans have on the financial performance and cash flows of the entity.

While the Board does not propose specific disclosure objectives for defined contribution plans, the proposed specific disclosure objectives for defined benefit plans include amounts in the primary financial statements relating to defined benefit plans, the nature of, and risks associated with, defined benefit plans, expected future cash flows relating to the defined benefit obligations at the end of the period, future payments to members of defined benefit plans that are closed to new members, measurement uncertainties associated with the defined benefit obligation, and drivers of change in the amounts in the statement of financial position relating to the defined benefit plans. The proposed amendments also note the kind of information needed to meet the disclosure objectives.

In addition, the proposed amendments also touch on  multi-employer plans and defined benefit plans that share risks between entities under common control as well as other types of employee benefit plans.

Comments on the draft guidance and the proposed changes are requested by October 21, 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

 

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.