The proposed amendments aim to improve financial reporting, particularly for business combinations, focusing significantly on disclosure enhancements and simplifying impairment tests.

It will also affect how entities perform goodwill impairment assessments, directing entities to do so at the lowest level monitored by management for the related business. This should prevent the automatic assignment of goodwill to operating segments, which may result in allocating goodwill to more cash-generating units (CGUs). This may lead to increased effort if additional impairment assessments are needed for multiple CGUs that have been allocated goodwill.

The objective of the IASB’s proposals is to:

• increase the qualitative information provided about business combinations.
• simplify and reduce the costs associated with performing the quantitative impairment test.
• improve the effectiveness of the impairment test.

Access the press release and the exposure draft on the AcSB’s website.

The project will assess whether the requirements of IAS 38 Intangible Assets remain relevant and continue to fairly reflect current business models or whether the IASB should improve the criteria. The initial research and planning phase aims to define the scope of issues to be explored in the project and explore the best approach to plan and organize the work.

During the third agenda consultation, stakeholders highlighted deficiencies in the reporting of intangible assets and raised matters relating to all aspects of IAS 38 Intangible Assets, including its scope, its recognition and measurement requirements (including the difference in the accounting for acquired and internally generated intangible assets), and the adequacy of the information companies are required to disclose about intangible assets.

Although the title of this project refers to intangible assets, the IASB will also consider whether the project should be limited to accounting for and disclosing information about financial statement elements or whether the project should aim to address intangible items more broadly.

Access the press release on the IASB’s website.

At the IFASS meeting, members explored the potential and limitations of AI in standard setting through two presentations. The first presentation introduced AI, including machine learning, deep learning, and generative AI, which can create new content. This AI subtype, large language models (LLMs), can generate human-like text but lacks critical thinking abilities and requires constant, costly training.

The second presentation showcased an LLM trained for disclosure analysis, particularly analyzing sustainability reports. The analysis of 11,000 reports highlighted the need for careful review of AI-produced results, as many generated statements needed more support and had inaccurate citations. The study concluded that fluency often compromises accuracy.

In the context of standard setters' work, the possibility of training an LLM was discussed due to the specific and low-volume literature. The potential administrative applications, such as drafting meeting minutes, were also highlighted. Although using LLMs for comment letter analysis seems appealing, it was noted that the results would still require review. However, this could facilitate searches for specific comments. Employing multiple LLMs trained for different perspectives, mediated by another model, was suggested to generate valuable arguments that could stimulate original thought.

Access the full agenda and topics discussed during the IFASS meetings.

IFRS 3 Business Combinations currently governs reporting requirements for acquisitions. However, that standard does not specify how to report transactions that involve transfers of businesses between companies under common control (for example, companies in the same group).. To tackle this, the IASB introduced a discussion paper in November 2020 to increase transparency and uniformity in reporting such transactions.

The project summary clarifies the reasoning behind the board’s decision, made in November 2023, not to proceed with developing reporting requirements for BCUCCs.

The IASB recognized the varied reporting practices for BCUCCs and understood from investor feedback that they could manage this diversity. The wide range of investor information requirements across jurisdictions complicates the creation of universal reporting standards. Moreover, the IASB’s research indicated that while potential enhancements to financial reporting could arise from the development of BCUCC reporting requirements, the associated costs of implementing such changes would likely outweigh the benefits.

Access the press release and the project summary on the IASB’s website.

The article explains:

• what digital financial reports are and how they are created;
• the benefits of digital financial reporting for investors, companies and regulators; and 
• the importance of the IFRS digital taxonomies.

The IFRS article outlines the many advantages of financial reports structured in machine-readable formats like XBRL and iXBRL. They enable efficient data extraction and comparison, empowering investors to make informed decisions on a large scale. These reports also facilitate automated validation checks, technology-driven monitoring, and improved market oversight, fostering transparency and accountability.

It also highlights global regulatory efforts to advance digital reporting. These include the SEC's introduction of XBRL and iXBRL requirements since 2009 for transparent financial disclosures and the EU's ESEF mandates that aim to boost the accessibility, analysis, and comparability of annual financial reports, bolstering investor trust and market integrity.

While Artificial Intelligence (AI) assisted tagging boosts efficiency, human supervision is vital for accountability and data accuracy. Collaboration among regulators, policymakers, software providers, and auditors is essential to preserve the integrity and accessibility of digital financial reports.

Access the article on the IFRS’s website.

The new Standard, IFRS 18 Presentation and Disclosure in Financial Statements, will give investors more transparent and comparable information about companies’ financial performance, enabling better investment decisions.

IFRS 18 introduces three sets of new requirements to improve companies’ reporting of financial performance and give investors a better basis for analyzing and comparing companies:

1. Improved comparability in the statement of profit or loss (income statement)

• The income statement currently lacks a fixed structure, causing inconsistencies in companies reported operating profits, thus reducing comparability. IFRS 18 introduces a new structure with defined categories - operating, investing, and financing - and mandates specific subtotals, including operating profit. This will enhance the consistency and comparability of companies' performance analysis.

2. Enhanced transparency of management-defined performance measures

• Companies often use alternative performance measures but typically lack sufficient information for investors to understand their calculation and relation to income statement measures. IFRS 18 will require companies to disclose and explain these company-specific measures, improving their transparency discipline and making them auditable.

3. More useful grouping of information in the financial statements

• IFRS 18 provides more explicit guidance on the organization and presentation of financial data, addressing issues caused by over-summarized or over-detailed information. It mandates more transparency about operating expenses, aiming to deliver more detailed, helpful information and facilitate investor understanding.

The standard is effective for annual reporting periods beginning on or after January 1, 2027, but companies can apply it earlier. Changes in companies’ reporting resulting from IFRS 18 will depend on their current reporting practices and IT systems.

Access the press release on the IFRS’s website.

The Independent Review Committee on Standard Setting in Canada recommended that an effectiveness review be conducted with the assistance of an independent third party to help streamline and harmonize oversight activities and processes. In response to the results, the Effectiveness Review Joint Taskforce and the current oversight councils approved that a single council be created to oversee standard setting for accounting, audit and assurance, and sustainability.  

This decision consolidates the activities of three oversight bodies – the Auditing and Assurance Standards Oversight Council (AASOC), Accounting Standards Oversight Council (AcSOC), and the Canadian Sustainability Standards Board (CSSB) Implementation Committee – streamlining the processes and activities for accounting, audit, assurance, and sustainability standard setting.

The Oversight Council is effective from April 1, 2024, and will focus its initial work on establishing its operations and governance processes. It will begin its formal oversight work on July 1, 2024. The current oversight bodies will conclude their operations on June 30, 2024.

Access the press release on the FRASCanada website.

The Independent Review Committee on Standard Setting in Canada recommended that an effectiveness review be conducted with the assistance of an independent third party to help streamline and harmonize oversight activities and processes. In response to the results, the Effectiveness Review Joint Taskforce and the current oversight councils approved that a single council be created to oversee standard setting for accounting, audit and assurance, and sustainability.  

This decision consolidates the activities of three oversight bodies – the Auditing and Assurance Standards Oversight Council (AASOC), Accounting Standards Oversight Council (AcSOC), and the Canadian Sustainability Standards Board (CSSB) Implementation Committee – streamlining the processes and activities for accounting, audit, assurance, and sustainability standard setting.

The Oversight Council is effective from April 1, 2024, and will focus its initial work on establishing its operations and governance processes. It will begin its formal oversight work on July 1, 2024. The current oversight bodies will conclude their operations on June 30, 2024.

Access the press release on the FRASCanada website.

AcSB developed a framework in the 2023-2024 fiscal year to respond to interested and affected parties needing additional guidance when applying Parts II and III of the Handbook. The AcSB will focus in 2024-2025 on implementing this framework.

AcSB will review its standards (ASPE & IFRS) to improve their relevance for users and address feedback on scalability and emerging issues. They will collaborate with the Canadian Sustainability Standards Board (CSSB) and the International Accounting Standards Board (IASB) to ensure Canadian perspectives are reflected in international standards. To further engage with stakeholders, they are planning to increase the number of in-person events, fostering meaningful discussions on critical accounting issues.

Access the annual plan on the AcSB’s website.

The AcSB expressed overall support for the IASB's proposed disclosure and financial statement presentation requirements in the Exposure Draft. They believe these proposals, which respond to the feedback from the June 2018 Discussion Paper "Financial Instruments with Characteristics of Equity," will offer more decisive and helpful information to financial statement users about complex financial instruments, thus enhancing comparability.

However, the AcSB believes that IASB's current Exposure Draft should have concentrated solely on disclosures and financial statement presentation as the specific classification and measurement proposals do not fulfill the IASB's objectives for this project. Nonetheless, should the IASB proceed with these classification and measurement proposals, the AcSB recommends additional modifications and clarifications.

Access the comment letter on the IFRS’s website.