September 2021

Senators’ letters raise the heat on SPACs

Sep 22, 2021

On September 22, 2021, in a development that unquestionably raises the heat on SPACs and SPAC sponsors, a group of four Democrat senators sent each of six serial SPAC creators a letter raising questions about the creators’ SPAC-related activities and financial rewards.

The letters’ purpose ostensibly is to allow the Senators to “understand what sort of Congressional or regulatory action may be necessary to better protect investors and market integrity.”

Review a summary of the letters on the D&O Diary and the letters on US Senate's website.

Standard setters discuss intangibles

Sep 30, 2021

On September 30, 2021, the International Forum of Accounting Standard Setters (IFASS) held its fall meeting as a virtual conference. The whole afternoon was devoted to the discussion of intangibles.

As IASB Chair Andreas Barckow pointed out in his inaugural speech at the WSS meeting on Monday, IAS 38, Intangible Assets is more than 20 years old and has never been revisited other than for consequential changes resulting from other projects. He also indicated that he would like the IASB to look into the accounting for intangibles. Reactions to the IASB's agenda consultation showed that constituents would also be interested in “intangibles” as a potential IASB project (while there seem to be diverse views regarding the scope and objective of that potential project). Other developments such as the IVSC perspectives paper Time to get Tangible about Intangible Assets show that there is a great appetite for addressing the issue.

The IFASS session on intangibles started off with the European Financial Reporting Advisory Group (EFRAG) introducing its discussion paper Better information on intangibles – which is the best way to go?. The discussion paper notes that that the value relevance of financial statements is decreasing, which could be due to financial statements not reflecting information about intangibles, which has become more important for more entities than previously. It considers three approaches for better information on intangibles:

  • Recognition and measurement in the primary financial statements;
  • Information on specific intangibles in the notes to the financial statements or in the management report;
  • Information on future-oriented expenses and risk/opportunity factors that may affect future performance in the notes to the financial statements or in the management report.

The scope of EFRAG’s discussions goes beyond the existing definition of assets in financial reporting and also covers sources of possible economic benefits that would not be controlled by an entity.

Following the EFRAG presentation, the Australian Accounting Standards Board (AASB) presented its research on intangible assets. The research is an work in progress, so the staff presented first insights into the research paper that is expected to be published in Q4 2021 or Q1 2022. The research is working from the premise that IAS 38 is very old and leaves gaps in the information reported. To fill the existing information gap quickly, it would seem that following the third of the three possible approaches identified (do nothing, improve recognition and measurement, improve disclosures) would be the best way to follow. Outreach undertaken revealed great support for the approach while suggested additional information provided on unrecognised internally generated intangible assets varied (financial, non-financial, fair value). The forthcoming AASB paper will include a recommended principle, a recommended disclosure objective and (examples of) recommended implementation guidance.

The AASB research is still ongoing. More information on the project and access to a corresponding survey is available on the AASB website.

Following the presentations, participants discussed the findings, investor needs and aspects the IASB should consider in a potential project. Questions, comments and observations included:

  • IAS 38 is no longer fit for purpose, especially digital assets need to be considered (there are currently some software providers whose most significant asset is not on their balance sheet).
  • The uneven playing field between internally generated and acquired intangible assets needs to be reconsidered.
  • There is no need to reconsider the the definition of intangible assets, it is a definition of the word intangible that is needed.
  • IAS 38 does currently not reflect the economic value of an entity.
  • User needs should be the most important aspect considered.
  • There are challenges as regards the valuation of some intangible assets, maybe a hybrid approach of only recognising those that can be measured reliably should be considered.
  • Most intangibles assets are unique, however, bringing them onto the balance sheet might provide the market with the means of pricing them.
  • If intangible assets are recognized, will there also be corresponding liabilities?
  • There is a strong link between intangible assets and sustainability - which Board should take them on?
  • Are crypto assets and crypto currency intangibles?
  • Where would the information be located?
  • Would it be audited?

The IASB Chair noted that the IASB is currently behind some of the standard setters as regards intangibles. It will consider the research and results once it has "digested" the feedback from the agenda consultation. He also acknowledged the wide variety of views on the scope of a potential IASB project on intangibles - as well as the fact that there was general agreement that the wider the scope of the project, the smaller the chances of a timely solution. A general feeling was also that the IASB should approach the problem in stages, beginning with disclosures.

Testimony before the United States Senate Committee

Sep 14, 2021

On September 14, 2021, the Securities and Exchange Commission (SEC) Chair Gary Gensler testified before the Senate Committee on banking, housing and urban affairs.

In the testimony, he covers some of the broad themes from the SEC’s unified agenda, before closing with a few words on their enforcement and examinations divisions.

  • Market Structure
  • Predictive Data Analytics
  • Issuers and Issuer Disclosure
  • Funds and Investment Management

Review the full speech and the 2-hour C-SPAN video.

Trustees decision on the ISSB expected in October

Sep 28, 2021

On September 20, 2021, the IFRS Foundation Trustees held a video conference. The Trustees discussed progress on their work to establish a new board focused on sustainability-related disclosure standards (the proposed International Sustainability Standards Board—ISSB) under the IFRS Foundation’s governance structure.

The Trustees were provided with a briefing on the work of the Technical Readiness Working Group, which included the planning for the appropriate transfer of technical expertise, content and resources to the proposed ISSB and steps taken in order to provide the proposed ISSB with a ‘running start’. In addition, the Trustees were updated on (1) the capital funding and other support received from jurisdictions and (2) feedback received on the proposed amendments to the IFRS Foundation Constitution.

The next meeting is scheduled for the week of October 18, 2021. During that meeting, the Trustees will make a final determination about establishing the new board.

Review the full summary on the IASB’s website.

Updated IASB work plan — Analysis (September 2021)

Sep 27, 2021

On September 27, 2021, the International Accounting Standards Board (IASB) updated its work plan following its September 2021 meeting.

Below is an analysis of all changes made to the work plan since our last analysis on July 24, 2021.

Standard-setting projects

  • Disclosure initiative — Subsidiaries that are SMEs An exposure draft was published on July 26, 2021 with comments requested by January 31, 2022; feedback received will be discussed in H1 2022; in addition, the project was renamed to Disclosure initiative — Subsidiaries without public accountability: Disclosures
  • Disclosure initiative — Targeted standards-level review of disclosures The discussion of feedback is now expected in Q1 2022 (previously H1 2022)
  • Rate-regulated activities The discussion of feedback is now expected in October 2021 (previously Q4 2021)

Maintenance projects

Research projects

Other projects

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

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