Deviating slightly from the original proposal but not changing the core practical relief, the Board decided to allow the expedient to be applied to COVID-19-related rent concessions to payments originally due on or before 30 June 2021. The Board also decided to require disclosure of the amount recognised in profit or loss to reflect changes in lease payments that arise from COVID-19-related rent concessions. Finally, the Board decided that in the reporting period in which a lessee first applies the amendment, it is not required to disclose the quantitative information required by paragraph 28(f) of IAS 8. All decisions were supported by 13 Board members.

The amendment will have an effective date of June 1, 2020 with early application permitted. Despite the wording "annual reporting periods" the amendment would also be available for interim reports.

For lessors, the Board decided take no further action. It argued that as many entities face significant challenges at the moment, there needs to be sufficient reason to undertake standard-setting, which the Board did not see enough evidence for. This decision was supported by all 14 Board members.

The Board did not see a need for re-exposure and no Board member intends to dissent from the issuance of the amendment. The Board is satisfied that it has complied with the applicable due process requirements and gave permission to begin the balloting process for the amendment. These decisions were supported by all 14 Board members.The staff expect issuing a final amendment on or around May 28, 2020.

Background

The issue was initially raised with the IFRS Interpretations Committee that had originally intended to develop an interpretation of IAS 16, Property, Plant and Equipment to deal with it. However, during the course of discussions the Committee concluded that a narrow-scope amendment to IAS 16 would be a better solution. The IASB developed an exposure draft published in June 2017 and has now finalized the amendments.

Changes

Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) amends the standard to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the cost of producing those items, in profit or loss.

Effective date and transition

The amendments published today are effective for annual periods beginning on or after  January 1, 2022. Early application is permitted. An entity applies the amendments retrospectively only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments.

Additional information

• IASB press release

Annual Improvements to IFRS Standards 2018–2020 makes amendments to the following standards:

The amendments to IFRS 1, IFRS 9, and IAS 41 published today are all effective for annual periods beginning on or after January 1, 2022. Early application is permitted. The amendment to IFRS 16 only regards an illustrative example, so no effective date is stated.

Review the press release on the IASB's website.

Background

In March 2018, the IASB issued the 2018 Conceptual Framework and most references to the Framework included in IFRSs were updated to the 2018 Framework at that time. However, paragraph 11 of IFRS 3, Business Combinations, which continued to refer to the 1989 Framework, was not updated as this could have caused conflicts for entities applying IFRS 3.

Potential conflicts occur as the definition of assets and liabilities in the 2018 Framework differ from those in the 1989 Framework potentially leading to day 2 gains or losses post-acquisition for some balances recognized.

In a May 2019 exposure draft, the IASB identified three possible amendments to IFRS 3 that would update IFRS 3 without significantly changing its requirements. These amendments have now been finalized.

Changes

The changes in Reference to the Conceptual Framework (Amendments to IFRS 3):

• update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework;
• add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and
• add to IFRS 3 an explicit statement that an acquirer does not recognize contingent assets acquired in a business combination.

Effective date

The amendments published today are effective for annual periods beginning on or after January 1, 2022. Early application is permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier.

Additional information

• IASB press release

Background

The IFRS Interpretations Committee received a request to clarify what costs an entity considers in assessing whether a contract is onerous. The Committee’s research revealed that, for some contracts, differing interpretations of the onerous contract requirements in IAS 37, Provisions, Contingent Liabilities and Contingent Assets could have a material effect on entities that enter into those contracts. Consequently, the Committee recommended that the Board clarifies the onerous contract requirements in IAS 37. The Board supported the Committee’s suggestion and published an exposure draft of proposed clarifications in December 2018, which were finalized today.

Changes

The changes in Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).

Effective date and transition requirements

The amendments published today are effective for annual periods beginning on or after January 1, 2022. Early application is permitted.

Entities apply the amendments to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which the entity first applies the amendments. Comparatives are not restated.

Additional information

• IASB press release

The event was organized into a general introductory section and the discussion of five key topics (each again introduced by IASB and EFRAG) that were then opened to questions from the audience. The agenda below indicates where during the two-and-a-half hour recording the individual topics were discussed:

• Opening and welcome
• General introduction to the IASB exposure draft General Presentation and Disclosures (begins at about 5:00 minutes)
• EFRAG’s view on the topic (begins at about 12:00 minutes)
• Key Topic 1 – Defined lines and subtotals in the income statement – improved comparability or imposed uniformity? (begins at about 21:00 minutes)
• Key Topic 2 – Looking at the new subtotals – what is the impact and will they work for all industries? (begins at about 1:20:00 hours)
• Key Topic 3 – Management performance measures – definition, disclosure and unusual items: Will management still be able to explain the overall performance / generation of income in the context of the activities and business strategy? (begins at about 1:42:00 hours)
• Key Topic 4 – Principles of aggregation and disaggregation – new proposals expected compared to how companies disaggregate information today (begins at about 2:19:00 hours)
• Key Topic 5 – Statement of cash flows – change to the starting point, new disaggregation due to new line items introduced and removal of classification choice for interest and dividends (begins at about 2:27:00 hours, introduction by IASB and EFRAG only, no discussion due to reasons of time)

The recording of the outreach event is available here. You can also access the slides for the event on the EFRAG website.

Specifically, Ms. Ko discussed:

• Background on how the IFRS Foundation started and its role in the development of the IFRS Standards.
• Current state of sustainability report where there are over 650 different metric available and the desire by many to consolidate the metrics into a global comparable framework.
• Actions taken by (1) the IASB which include the update to its Practice Statement Management Commentary and (2) the Trustees which include the establishment of a working group to determine the role of the IFRS Foundation in sustainability reporting.

Review the full presentation on the IASB’s website.

This resource highlights topics that may be relevant for private enterprises to consider when preparing financial statements in accordance with Part II of the CPA Canada Handbook – Accounting.

Review the publication on the AcSB's website.

The topics covered during the meeting were the following (numbers in brackets are ref­er­ences to the cor­re­spond­ing para­graphs of the summary):

• IBOR reform and its effects on financial reporting — Phase 2 (1–12): The ASAF were provided with an overview of the IASB’s proposed amendments for the forthcoming Exposure Draft Interest Rate Benchmark Reform — Phase 2 and gave their initial views to the expected proposals, which they were in broad agreement. In addition, the ASAF members provided feedback on what constitutes a ‘modification’ of financial assets and financial liabilities, disclosures, and other topics.
• Update on agenda planning (13–17): The ASAF was given an update on the IASB’s work plan and the change of timelines of various projects due to the coronavirus pandemic. The ASAF expects its next meeting to be held in July 2020 and will likely be virtual.
• Goodwill and Impairment (18–25): The ASAF were provided with an overview of the IASB’s preliminary views on Discussion Paper Business Combinations — Disclosures, Goodwill and Impairment and provided recommendations on how to conduct outreach and fieldwork activities.
• Better Communication — Primary Financial Statements (26–46): The ASAF discussed topics related to the proposals in Exposure Draft General Presentation and Disclosures. Topics discussed include subtotals and categories in the statement of profit or loss, disaggregation, management performance measures, and statement of cash flows.

Review the full summary on the IASB's website.

The two-part document covers firstly topics relevant to all professional accountants, and secondly, topics pertinent to auditors and other professional accountants in public practice. Dr. Stavros Thomadakis, Chairman of the IESBA, offers his thoughts in the publication’s foreword.

Review the press release and Q&A on the IESBA's website.