May 2022

Canadian AcSB Chair Linda Mezon-Hutter appointed to International Accounting Standards Board

May 26, 2022

On May 26, 2022, the Trustees of the IFRS Foundation announced the appointment of Linda Mezon-Hutter and Robert Uhl as IASB Board members. Their appointments are for a five-year term starting in September 2022. In addition, three Board members have been reappointed for a second three-year term.

Ms. Mezon-Hutter has served as a member, Vice-Chair and ultimately Chair of the Canadian Accounting Standards Board (AcSB). She has also served on the IASB’s Accounting Standards Advisory Forum. Before joining the AcSB, Mezon-Hutter served as the Chief Accountant at Royal Bank of Canada.

Mr. Uhl has served as a Partner and National Director for Accounting Standards at Deloitte in the United States. He was also a member of the IFRS Interpretations Committee and the US Financial Accounting Standards Board’s (FASB) Emerging Issues Task Force. In addition, he has served as a Professional Accounting Fellow at the Office of the Chief Accountant at the US Securities and Exchange Commission.

Nick Anderson, Jianqiao Lu and Ann Tarca have been reappointed to serve a second, three-year term. Mr. Anderson's and Mr. Lu’s second terms start September 1, 2022, whereas Ms. Tarca’s second term starts on July 1, 2022.

Review the press release on the IFRS Foundation's website also notes that Mary Tokar’s second term has been extended from June 30 to August 31, 2022.

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.

G7 welcomes ISSB’s progress on global baseline of sustainability disclosures

May 20, 2022

On May 20, 2022, the G7 Finance Ministers and Central Bank Governors have issued a communiqué which discusses work done to support Ukraine, macroeconomic stability, global health, digitalization of economies, climate and environment, financial market policy and sustainability, and international financial architecture.

In particular, the G7 communiqué comments on the establishment of the ISSB and its future work:

The G7 welcomes the inauguration of the International Sustainability Standards Board (ISSB) and its progress of work on the global baseline of sustainability reporting standards. We welcome the ISSB “path to global baseline” statement of 18 May 2022 and call on all relevant stakeholders to participate in the ongoing consultation on the proposed standards. We urge the ISSB and national and regional standard-setters as well as other reporting initiatives to actively cooperate in the process of elaborating the baseline with the aim of reaching standards that can be implemented globally. The baseline should be practical, flexible and proportionate and ultimately suitable for small- and medium-size enterprises and enable jurisdictions to implement the baseline and a more extensive approach to supplement the baseline. We encourage countries to prepare or continue to prepare the ground for usage of the baseline, aim to ensure interoperability of national and regional standards and the global baseline in order to minimize fragmentation of reporting requirements, reduce reporting burdens, and enable the availability of consistent sustainability information for users. We encourage the ISSB to continue its work on sustainability reporting standards beyond climate, such as nature and social issues.

Review the communiqué on G7 Germany website.

IASB and ISSB outline future plans for the use of the integrated reporting framework and the integrated thinking principles

May 25, 2022

On May 25, 2022, the Chairs of the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB) communicated plans for the future role, governance and development of the Value Reporting Foundation’s integrated reporting framework and integrated thinking principles as the VRF is being consolidated into the IFRS Foundation.

The statement notes that IASB and ISSB are convinced that the integrated reporting framework drives high-quality corporate reporting and connectivity between financial statements and sustainability-related financial disclosures. They therefore strongly encourage continued use of the framework and the principles underpinning it.

The joint statement explains that the framework and the principles will become part of the materials of the IFRS Foundation and the IASB and the ISSB will assume responsibility for their future use and development. The Chairs and Vice-Chair(s) of the IASB and the ISSB undertake that the boards will work together to agree on how to build on and integrate the framework into their standard-setting projects and requirements. The IASB and ISSB will utilize principles and concepts from the framework in their standard-setting work. The Chairs of the IASB and ISSB also commit to a long-term role for a corporate reporting framework, incorporating principles and concepts from the current framework. Such a framework would enable connected, holistic and cohesive corporate reporting.

Review the full statement on the IFRS Foundation'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.

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.

Staff seeks feedback on future on a future IFRS sustainability disclosure taxonomy for digital reporting

May 25, 2022

On May 25, 2022, the staff of the International Sustainability Standards Board (ISSB) is looking for feedback that would inform the development of a taxonomy to enable digital consumption of sustainability disclosures prepared using the ISSB's IFRS Sustainability Disclosure Standards.

The IFRS Sustainability Disclosure Taxonomy would be the counterpart to the IFRS Accounting Taxonomy developed to enable digital consumption of information provided by companies applying IFRS Accounting Standards issued by the International Accounting Standards Board (IASB).

Responses to the staff request for feedback are due by September 30, 2022 and can be provided by filling in an online form or by sending a comment letter.

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

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

May 30, 2022

On May 30, 2022, the In­ter­na­tional Ac­count­ing Stan­dards Board (IASB) up­dated its work plan fol­low­ing its May 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 April 29, 2022.

Standard-setting projects

Maintenance projects

  • Lack of exchangeability — A decision on the project direction is planned but there is no specified date (previously July 2022).

Research projects

  • Extractive activities — A decision on the project direction is now expected in July 2022 (previously Q3 2022)

Other projects

  • IFRS Sustainability Disclosure Taxonomy — A project newly added to the work plan; feedback on the staff request for feedback will be discussed in H2 2022
  • Research program — This entry provided a history of research projects; it has been removed from the work plan
  • Third agenda consultation — A feedback statement is now expected in July 2022 (previously Q3 2022)

The above is a faithful comparison of the IASB and ISSB work plan at April 29, 2022 and May 30, 2022.

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