September 2022

IASB issues amendments to IFRS 16

Sep 22, 2022

On September 22, 2022, the International Accounting Standards Board (IASB) issued "Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)" with amendments that clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale.



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 published an exposure draft (ED) of a proposed clarifying amendment in November 2020 and has now issued final amendments to IFRS 16.



Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full termination of a lease.

While the November 2020 ED had proposed that a seller-lessee initially measures the right-of-use asset and lease liability arising from a leaseback using the present value of expected lease payments at the commencement date, the final amendments do not prescribe specific measurement requirements for lease liabilities arising from a leaseback.

The amendments also include one amended and one new illustrative examples.


Effective date and transition

The amendments are effective for annual reporting periods beginning on or after January 1, 2024. Earlier application is permitted.

A seller-lessee applies the amendments retrospectively in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors to sale and leaseback transactions entered into after the date of initial application.


Dissenting opinion

One Board member voted against issuing the finalised amendments. This Board member believes that a sale and leaseback transaction should be accounted for by the seller-lessee by recognising the full gain or loss on the transaction immediately. This approach would have required the IASB to reconsider the sale and leaseback requirements in IFRS 16 as a whole, which the IASB decided against.


Additional information


Standard setters discuss jurisdictional perspectives on sustainability reporting

Sep 28, 2022

The International Forum of Accounting Standard Setters (IFASS) held its fall meeting in London. The whole morning was devoted to the discussion of sustainability reporting.

The meeting began with three presentations: A representative of the European Financial Reporting Advisory Group (EFRAG) introduced ESRS E1 Climate Change; a representative of the International Public Sector Accounting Standards Board (IPSASB) discussed the consultation paper Advancing Public Sector Sustainability Reporting; and Acting Chief Accountant Paul Munter presented on the proposed US Securities and Exchange Commission (SEC) rule The Enhancement and Standardization of Climate-Related Disclosures for Investors.

The objective of ESRS E1 is to specify disclosure requirements that would enable users of sustainability reporting to understand how an undertaking affects climate change in terms of actual or potential impacts, the undertaking’s past, current and future mitigation efforts, the plans and capacity of the undertaking to adapt its business model(s) and operations, the nature, type and extent of the material physical and transition risks and opportunities, and the effects of climate-related risks and opportunities on the undertaking’s development, performance, position over the short, medium and long term and its ability to create enterprise value. The proposed requirements are very comprehensive and granular, so while the overall feedback was generally supportive, there were calls to simplify and clarify. The IFASS members also commented on the degree of detail, but were told that while EFRAG was working hard on identifying possible simplifications, there was little room for them and that there was also the need to balance granularity for comparability against the call for simplifications. 

The IPSASB consultation is not about about standard-setting per se, but more about the question whether the IPSASB should move into the area of sustainability reporting. Triggering the IPSASB's initiative was the clear realisation that there is a marked gap in the public sector that needs to be filled, especially since natural resources are a major source of income of governments in some jurisdictions. Feedback to the consultation showed that stakeholders agreed that the public sector needs sustainability reporting, that the IPSASB should lead the development of public sector sustainability reporting guidance, and that the IPSASB should work in collaboration with other international bodies to address global inconsistencies. Comments from the room echoed the feedback that a global approach is needed and that the IPSASB should not start from scratch but should build on existing frameworks (especially on the ISSB standards) and adjust them to public sector needs. The IPSASB representative admitted that sustainability reporting was not a political priority for jurisdictions and also not an area of IPSASB expertise. So further steps of the IPSASB regarding sustainability reporting need to be carefully thought about.

The Acting Chief Accountant noted that the SEC proposed rule amendments that would require a domestic or foreign registrant to include certain climate-related information in its registration statements and periodic reports as investors have expressed a need for more consistent, comparable and reliable information about the effects of climate-related risks on a company’s business and as current climate-related disclosure practices are fragmented and inconsistent. He explained that the rule amendments are not aimed at telling businesses what to do, but if they do something, then the rule amendments would detail how to report on it. He also noted that many companies already report on sustainability outside of their filings, but to require them to include this information in their filings would streamline the reporting and, most importantly, ensure that the information reported is prepared with greater care and rigour. The SEC received more than 14,000 comments on its proposal - after evaluating the feedback, the Commission will decide whether to adopt final rules.

The presentations were followed by a panel discussion chaired by ISSB Vice-Chair Sue Lloyd with panel members from the Australian Accounting Standards Board (AASB), the UK Financial Reporting Council (FRC), the Korean Accounting Standards Board (KASB), the Pan-African Federation of Accountants (PAFA), and the Sustainability Standards Board of Japan (SSBJ). The panel members expressed full support for the global baseline approach of the ISSB, which they described as much needed. Other comments included:

  • Global baseline does not mean that the standards are basic; they will provide a full set of information for investors.
  • The fact that the standards are based on the TCFD recommendations is greeted in the UK where mandatory TCFD-reporting is currently being phased in.
  • There is some anxiety in African countries about what sustainability reporting will mean in practice.
  • Australia will use the ISSB standards as starting point and then, if necessary, add Australia-specific requirements (same approach as with IFRSs).
  • It was noted that the ISSB standards will need to allow for enough flexibility to actually build on them (e.g. regarding double materiality).
  • There were concerns from several jurisdictions regarding the industry specific part of the climate standard, which were perceived as not being international enough and in some cases divided rather arbitrarily between the two standards proposed by the ISSB.
  • The standards should be inclusive and scalable. This should not only refer to more advance and less advanced jurisdictions, but also to entity size.
  • It would be good if the standards could also be applied across different sectors.
  • The tension between investors calling for industry-specific requirements for reasons of comparability and the fact that industries and companies falling into these industries differ across jurisdictions was pointed out.
  • The amount of quantitative information required might be difficult to obtain. Might qualitative information work as an interim replacement?
  • The level of preparedness and knowledge between jurisdictions and between companies differs greatly. In some jurisdictions companies have other pertinent problems.
  • Jurisdictions are willing to support adoption of ISSB standards and capacity building, however, the ISSB will also have to provide support and supporting material.
  • The link between financial reporting and sustainability reporting was considered problematical, especially in jurisdictions where there is a great litigation risk (Korea, Australia).
  • The different time horizon between financial reporting and sustainability reporting was seen as difficult as the same issue might be assessed differently when looked at with a time horizon of one year or several years.
  • It was also noted, that some information that would be included in sustainability reporting simply could not be reflected in financial reporting.

Third IVSC perspectives paper on intangible assets

Sep 28, 2022

On September 28, 2022, the International Valuation Standards Council (IVSC) published a series of perspectives papers "Time to get Tangible about Intangible Assets" that notes that despite the importance of intangible assets to the capital markets, only a small percentage are recognised on balance sheets.

Following the first paper The Case for Realigning Reporting Standards with Modern Value Creation published in September 2021, the second paper Human Capital Introspective published in June 2022, a third paper Rethinking Brand Value can be accessed through the press release on the IVSC website.

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

Sep 26, 2022

On September 26, 2022, the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB) updated its work plan following its September 2022 meeting. Changes are numerous, many of them clarifications of expected timing.

Below is an analysis of all changes made to the work plan since our last analysis on July 25, 2022.

Standard-setting projects

Maintenance projects

Research projects

Other projects

  • IFRS accounting taxonomy update — Amendments to IAS 1 and IFRS 16 —A project newly added to the work plan; the next expected project step is a proposed taxonomy update in November 2022
  • IFRS sustainability disclosure taxonomy — Feedback on the staff request for feedback will now be discussed in November 2022 (previously Q4 2022)
  • Third agenda consultation This project was removed from the work plan as the IASB concluded the agenda consultation by releasing a feedback statement in July 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.