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.

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.

The report states that company-produced information (like invoices or IT system reports) and external information (like customer purchase orders or bank records) are critical in audits. In the 2021 and 2022 inspection cycles, around 17% of audited firms had deficiencies due to inadequate procedures for testing the accuracy and completeness of this information.

To improve audit quality, the Spotlight highlights:

• Common audit deficiencies
• Good practices
• Other reminders that may improve auditor understanding of how to properly test IPC and information from external sources.

Access the Spotlight report on the PCAOB’s website.

According to the AASB, the draft Strategic Plan 2026-2029 has been crafted carefully considering the changing environment and the diverse needs of interested and affected parties. Building on the foundation of the current strategy, the new plan now leverages the emerging issues monitoring process. It prioritizes an ongoing commitment to connect through a tailored engagement process. This iterative approach ensures that activities remain responsive to the needs of the community in the face of emerging challenges and opportunities.

The strategic goals for 2026-2029 are as follows:

• Monitor and understand emerging issues in the changing environment to better anticipate standard setting needs.
• Engage and collaborate with interested and affected parties to understand their needs and expectations.
• Set high-quality standards and guidance that respond to the evolving needs and expectations of interested and affected parties.
• Enhance standard-setting processes and capabilities to develop timelier solutions.
• Support the effective implementation and application of standards and guidance to enhance consistency and quality in engagement performance.

The response deadline to collect inputs through the survey is June 28, 2024.

Access the draft strategic plan and the survey on the AASB’s website.

The vote follows a political agreement between the Council of the EU and the EU Parliament in February 2024.

EU companies will still have to report as planned in line with general sustainability reporting standards adopted by the European Commission in July 2023. Later adoption of sector-specific standards for EU companies affects the extent of reporting, as the sector-specific part about companies’ particular impact on people and the planet in their area of activity will not be required before 2026.

The Parliament vote does not affect the reporting timelines as agreed under the Corporate Sustainability Reporting Directive (CSRD). As a next step, the legal text needs to be formally approved by the Council of the European Union before becoming effective.

Access the press release on the European Parliament’s website.

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 strategy reaffirms the IAASB's commitment to serving the public interest by developing globally accepted audit, review, and other assurance standards.

Key highlights of the strategy include:

• Completing priority audit and assurance projects, emphasizing fraud, going concern, and sustainability assurance.
• Commencing new initiatives and projects, including focusing on supporting the adoption and implementation of the overarching standard for sustainability assurance engagements, establishing an IAASB Technology Position, and conducting post-implementation reviews, as well as standard setting on, among other topics, audit evidence and risk response, materiality, and reviews of interim financial information.
• Collaborating with official stakeholders across the external reporting ecosystem, including the International Ethics Standards Board for Accountants (IESBA), regulators, standard setters, and other stakeholders.
• Engaging with regulatory and standard-setting partners to strengthen trust in markets globally.
• Further, the Monitoring Group’s recommendations will be implemented to enhance independence and accountability in standard settings.

Access the press release on the IAASB’s website.

Within the SWP, the IESBA has identified two high-priority strategic areas of focus, namely:

• Accounting firm culture and governance, which seeks to identify potential actions the IESBA might take within or outside the Code to respond to the persistent high-profile cases of unethical behaviour in accounting firms.
• Exploring the opportunity to extend the impact of the Code beyond the accountancy profession to a broader array of individuals who perform similar work as professional accountants, building on its current project to develop profession-agnostic ethics, including independence, standards for all sustainability assurance practitioners. Among other matters, this will include a new workstream to explore expanding the scope and applicability of the Code beyond professional accountants to all preparers of sustainability information.

The SWP also emphasizes the need to monitor the impact of rapid technological changes on the services provided by professional accountants, determining whether further standard-setting or actions are required in the public interest. Furthermore, it underscores the commitment to closely collaborate with the International Auditing and Assurance Standards Board (IAASB) and other standard-setters to ensure seamless interoperability between different standards.

The SWP represents the culmination of careful assessment of market developments and thoughtful consideration of stakeholder feedback from the IESBA’s extensive outreach and consultation activities over a two-year period.

Access the press release and the SWP on the IESBA’s website.

The first episode covers the March 2024 TIG meeting and is hosted by ISSB Vice-Chair Sue Lloyd, ISSB member Veronika Pountcheva and ISSB staff member Dianora Aria de Marco. They discuss the purpose and the objectives of the TIG, the submissions to the TIG, and insights from TIG members.

Access the press release on the IFRS’s website.