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News

UK Endorsement Board (UKEB) Image

UK Endorsement Board secretariat launches survey on the IASB BCUCC DP

07 Apr 2021

The UK Endorsement Board secretariat has launched a survey on the International Accounting Standard Board’s (IASB’s) Discussion Paper ‘DP/2020/2 Business Combinations under Common Control’ (BCUCC).

The survey seeks to understand stakeholders’ views on the proposals in the DP as well as stakeholders’ experiences with BCUCC. It is open until 30 April 2021.

The survey is available here.

IASB (International Accounting Standards Board) (blue) Image

IASB pushes publication of management commentary ED to May

07 Apr 2021

While the work plan of the IASB so far stated that an exposure draft (ED) for a revised Practice Statement 1 'Management Commentary' was expected in April 2021, the IASB has now released a statement that the expected publication date has been moved to May 2021.

Since the IASB's deliberations in the project have already been completed, the shift in publication date must be attributed to an attempt to balance out comment letter periods on different consultations.

During the March 2021 IASB meeting, which discussed the comment letter period for the management commentary ED, the IASB noted the difficult balance and the constraints on respondents' capacities:

  • The IASB has several consultation documents outstanding and plans to publish several more.
  • The COVID-19 pandemic has placed constraints on stakeholder resources.
  • Respondents to the ED may also develop responses to forthcoming proposals by the Trustees to change the Foundation’s Constitution to form an international sustainability reporting standards board within the existing governance structure of the IFRS Foundation and may find it difficult to respond to both documents at the same time.

Please click for the press release on the IASB website announcing the postponement.

IASB webcast Image

Report and video of an EAA workshop on the post-implementation review of IFRS 10, IFRS 11, and IFRS 12

07 Apr 2021

On 26 March 2021, the IASB, in conjunction with the European Accounting Association (EAA), held an EAA Financial Reporting Standards workshop that provided an overview of the request for information regarding the post-implementation review of IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements', and IFRS 12 'Disclosure of Interests in Other Entities'.

The purpose of the workshop was to obtain feedback on the matters included in the request for information and to discuss relevant academic evidence.

A recording of the workshop as well as the slides used are now available on the EAA website.

ESMA (European Securities and Markets Authority) (dark gray) Image

ESMA publishes report on the activities of accounting enforcers and their findings within the EU in 2020

06 Apr 2021

The report provides an overview of the activities of the European Securities and Markets Authority (ESMA) and the accounting enforcers in the European Union (EU) when examining compliance of financial information provided by issuers listed on regulated markets with the applicable financial reporting framework in 2020.

European enforcers examined the financial statements of about 729 issuers representing an average examination rate of 17% of all IFRS issuers with securities listed on regulated markets. These examinations resulted in 265 actions taken to address material departures from IFRS.

Enforcers also assessed the non-financial information related to ESG for 737 issuers, covering approximately 37% of the total estimated number of issuers required to publish a non-financial statement, resulting in 39 enforcement measures.

In addition, 611 management reports were reviewed for evaluating compliance with ESMA’s guidelines on alternative performance measures, covering around 14% of all IFRS listed issuers in Europe against which were taken 93 corrective actions.

Please click to access the full report on the ESMA website.

IFRS AC meeting (mid blue) Image

Agenda for the April 2021 IFRS Advisory Council meeting

06 Apr 2021

An agenda has been released for the upcoming meeting of the IFRS Advisory Council which will be held by remote participation on 13 April 2021.

A summary of the agenda is set out below:

Tuesday 13 April 2021 (12:00-16:25)

  • Welcome and Chair's preview
  • Sustainability
    • Introduction
    • Breakout sessions (closed session)
  • Updates on Trustees and Board’s Activities
  • Feedback from previous Advisory Council meetings
  • Sustainability
    • Report back from breakout sessions
    • Summary by Advisory Council Chair
  • Closing remarks

Agenda papers for the meeting are available on the IASB website.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG launches survey on crypto-assets (liabilities)

02 Apr 2021

The European Financial Reporting Advisory Group (EFRAG) is inviting stakeholders to participate in a survey on Discussion Paper (DP) 'Accounting for Crypto-Assets (Liabilities): Holder and Issuer Perspective'.

The DP discusses three categories of crypto-assets (payment tokens/cryptocurrencies, utility tokens, and investment tokens) and proposes three approaches for addressing IFRS related requirements.

Please click for more in­for­ma­tion and access to the survey on the EFRAG website.

CMAC (Capital Markets Advisory Committee) (mid blue) Image
GPF (Global Preparers Forum) (mid blue) Image

Summaries of the March 2021 CMAC and GPF meetings

01 Apr 2021

Representatives from the International Accounting Standards Board (IASB) met with both the Capital Markets Advisory Council (CMAC) on 11 March 2021 and with Global Preparers Forum (GPF) on 12 March 2021 by video conference. Notes and recordings from the joint meeting have now been released.

The topics discussed at the CMAC meeting included:

  • Post-implementation Review of IFRS 9—Classification and Measurement
  • Post-implementation Review of IFRS 10, IFRS 11 and IFRS 12
  • Rate-regulated Activities
  • Business Combinations Under Common Control

See the meeting summary on the IASB website.

The topics discussed at the GPF meeting included:

  • Sustainability Reporting
  • Post-implementation Review of IFRS 9—Classification and Measurement
  • Post-implementation Review of IFRS 10, IFRS 11 and IFRS 12
  • Rate-regulated Activities
  • IFRS Interpretations Committee update

See the meeting summary on the IASB website.

UKGAAP Image

UK GAAP application for reporting periods ending 31 March 2021

01 Apr 2021

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 31 March 2021.

As the revised UK GAAP regime has now been in place for a number of years, preparation of either parent company or subsidiary accounts under either FRS 101 or FRS 102 should now have become a more routine exercise. The FRC has made several changes to FRS 102 as part of its first triennial review of the Standard to deal with issues highlighted in its implementation. The amendments were published in December 2017. More recently amendments have been made to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period and also in relation to phase 2 of the interest rate benchmark reform.  Amendments have also been recently made to FRS 101, FRS 102, FRS 104 and FRS 105 as a result of the UK's exit from the European Union.

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 31 December 2020. For those reporters who want to understand new UK GAAP application for earlier periods please select one of the following:

Pronouncement Effective date Application for quarters ending 31 March 2021?
1st qtrs.* 2nd qtrs.** 3rd qtrs.*** Full yrs****
FRS 100
Amendments to FRS 101 - 2018/19 cycle issued The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 100 shall be applied at the same time. Mandatory # # #
Consequential amendments as a result of Amendment to FRS 101 – Effective date of IFRS 17 The amendments take effect for accounting periods beginning on or after 1 January 2023. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 100 shall be applied at the same time ~ ~ ~ ~
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Mandatory See left See left See left
FRS 101
Amendments to the Basis for Conclusions FRS 101 Reduced Disclosure Framework

No effective date. No amendments to FRS 101 have been made

N/A (see effective date column) N/A (see effective date column) N/A (see effective date column) N/A (see effective date column)
Amendments to FRS 101 - 2018/19 cycle issued

The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time.

Mandatory # # #
Amendments to FRS 101 - 2019/20 cycle issued

Paragraph 8 of FRS 101 notes that the exemptions are available from when the relevant standard is applied. Therefore there is no need to amend the effective date for these amendments, which will be available for financial statements approved after the amendments have been finalised.

Optional Optional Optional Optional
Changes the effective date of an amendment to the definition of a qualifying entity made in July 2019, effectively allowing relevant insurers to continue to apply FRS 101 for a further two years. The revised effective date for the new definition of a qualifying entity is accounting periods beginning on or after 1 January 2023 ~ ~ ~ ~

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Mandatory See left See left See left
FRS 102
Amendments to FRS 102: Multi-employer defined benefit plans

The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.

Already applied in the prior year - January 2020

Mandatory

Mandatory

Mandatory

Amendments to FRS 101 - 2018/19 cycle issued

The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 102 shall be applied at the same time

Mandatory

#

#

#

'Amendments to FRS 102 – Interest rate benchmark reform'.

The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.

Already applied in the prior year - January 2020

Mandatory

Mandatory

Mandatory

Amendments to FRS 101 - 2019/20 cycle issued

Paragraph 8 of FRS 101 notes that the exemptions are available from when the relevant standard is applied. Therefore there is no need to amend the effective date for these amendments, which will be available for financial statements approved after the amendments have been finalised.

Optional

Optional

Optional

Optional

Consequential amendments as a result of Amendment to FRS 101 – Effective date of IFRS 17 The amendments take effect for accounting periods beginning on or after 1 January 2023. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 102 shall be applied at the same time ~ ~ ~ ~
Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions The effective date for these amendments is accounting periods beginning on or after 1 January 2020, with early application permitted. Already applied in the prior year - January 2020 Mandatory Mandatory Mandatory
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Mandatory See left See left See left
‘Amendments to FRS 102 – Interest rate benchmark reform (Phase 2)’.

The amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted.

Mandatory Optional Optional Optional
FRS 104
Amendments to FRS 104 Interim Financial Reporting - Going concern The amendments are effective for interim periods beginning on or after 1 January 2021, with earlier application permitted Mandatory Optional Optional Optional
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Mandatory See left See left See left
FRS 105
Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions The effective date for these amendments is accounting periods beginning on or after 1 January 2020, with early application permitted.

Already applied in the prior year - January 2020

Mandatory

Mandatory

Mandatory

Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Mandatory

See left

See left

See left

* 1st quarter ending on 31 March 2021 (accounting period began on 1 January 2021).

** 2nd quarter ending 31 March 2021 (accounting period began 1 October 2020).

*** 3rd quarter ending 31 March 2021 (accounting period began 1 July 2020).

**** 4th quarter ending 31 March 2021 (accounting period began 1 April 2020).

# - The amendments to FRS 101 and the consequential amendments to FRS 100 and FRS 102 take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time. IFRS 17 has not yet been endorsed for use in the EU. If an entity applies the July 2019 amendments to FRS 101 early, the amendments to FRS 100 and FRS 102 are applied at the same time.

~ The amendments to FRS 101 and the consequential amendments to FRS 100 and FRS 102 take effect for accounting periods beginning on or after 1 January 2023. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time. IFRS 17 has not yet been endorsed for use in the EU. If an entity applies the July 2019 amendments to FRS 101 early, the amendments to FRS 100 and FRS 102 are applied at the same time.

 

 

Calendar Image

New and revised pronouncements as at 31 March 2021

01 Apr 2021

Our popular summary of new and revised financial reporting requirements, updated for financial reporting periods ending on 31 March 2021. This listing can be used to perform a quick check that new financial reporting requirements such as new and revised accounting standards and interpretations, and amendments to standards and interpretations, have been fully considered in the reporting close process.

The information below reflects developments to 1 April 2021 and will be updated through to 30 June 2021 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 31 March 2021. For accounts approved after June 2021, please also refer to subsequent versions of this document for any new and revised IFRSs that have additionally been issued that might require disclosure in the accounts under IAS 8:30.

The information below is organised as follows:

Summary

COVID-19 accounting considerations
Below is our usual analysis of new and amended standards, however, we are also aware that most, if not all, entities will have been impacted by the COVID-19 events. Please see our Need to know — Accounting considerations related to the Coronavirus 2019 Disease highlighting some of the key issues to be considered by the entities in preparing their financial statements and our UK Accounting Plus resource page on accounting considerations related to COVID-19. We additionally have a UK Accounting Plus collections page which includes all of our news and publications related to COVID-19.

The table below provides a summary of the pronouncements which will be mandatorily applied by UK entities for the first time at 31 March 2021, for various quarterly reporting periods. Where a UK entity chooses to prepare financial statements in accordance with IFRS Standards as issued by the IASB, as well as in compliance with IFRS Standards as adopted in conformity with the requirements of the Companies Act 2006, that entity should comply with the earlier IASB effective date for those items.

  • For accounting periods beginning on or after 1 January 2021, UK companies required or choosing to apply IFRS Standards will need to comply with UK-adopted IFRS Standards rather than EU-adopted IFRS Standards.
  • For accounting periods beginning prior to 1 January 2021, UK companies required or choosing to apply IFRS Standards must still prepare their financial statements in accordance with EU-adopted IFRS Standards. However, companies whose financial year spans 31 December 2020, and those whose filing deadline falls after 31 December 2020 but whose accounts have not been filed before 31 December 2020, may opt to apply any new IFRS Standards adopted by the UK in addition to EU-adopted IFRS Standards as at 31 December 2020.
  • For accounting periods beginning prior to 1 January 2021, if the entity has transferable securities admitted to trading on a UK regulated market, is required to produce consolidated accounts and is preparing accounts to satisfy DTR requirements, those accounts must additionally be prepared in accordance with IFRS Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. This means that EU adoption of IFRS Standards subsequent to 31 December 2020 remains relevant for such entities.

Further information on IFRS Standards in the UK is available here.

The table below provides a summary of these pronouncements, and which reporting periods they apply to:

Pronouncement IASB Effective date* EU/UK effective date* UK Mandatory at 31 March 2021?
1st qtrs.** 2nd qtrs.*** 3rd qtrs.**** Full yrs*****
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
1 January 2018 1 January 2018 Optional ~ Optional ~ Optional ~ Optional ~
Amendments to References to the Conceptual Framework in IFRS Standards 1 January 2020 1 January 2020 Already applied in prior year (January 2020) Yes Yes Yes
Definition of Material (Amendments to IAS 1 and IAS 8) 1 January 2020 1 January 2020 Already applied in prior year (January 2020) Yes Yes Yes
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) 1 January 2020 1 January 2020 Already applied in prior year (January 2020) Yes Yes Yes
Definition of a Business (Amendments to IFRS 3) 1 January 2020 1 January 2020 Already applied in prior year (January 2020) Yes Yes Yes
Covid-19-Related Rent Concessions (Amendment to IFRS 16) 1 June 2020 1 June 2020 Yes Yes Yes No
Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) 1 January 2021 1 January 2021 Yes No No No

* Generally annual reporting periods beginning on or after the date indicated, may only apply to first-time adopters in some limited cases (see below for full details).

** 1st quarter ending on 31 March 2021 (accounting period began on 1 January 2021).

*** 2nd quarter ending 31 March 2021 (accounting period began 1 October 2020).

**** 3rd quarter ending 31 March 2021 (accounting period began 1 Julyl 2020).

***** 4th quarter ending 31 March 2021 (accounting period began 1 April 2020).

~ The application of both approaches (overlay approach/ deferral approach) is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.

More information about these pronouncements, and all new and revised pronouncements, is set out below.

Financial statement considerations in adopting new and revised pronouncements

Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:

  • Updates to accounting policies. The terminology and substance of disclosed accounting policies may need to be updated to reflect new recognition, measurement and other requirements, e.g IAS 19 Employee Benefits may impact the measurement of certain employee benefits.
  • Impact of transitional provisions. IAS 8 Accounting Policies, Changes in Estimates and Errors contains a general requirement that changes in accounting policies are retrospectively applied, but this does not apply to the extent an individual pronouncement has specific transitional provisions.
  • Disclosures about changes in accounting policies. Where an entity changes its accounting policy as a result of the initial application of an IFRS and it has an effect on the current period or any prior period, IAS 8 requires the disclosure of a number of matters, e.g. the title of the IFRS, the nature of the change in accounting policy, a description of the transitional provisions, and the amount of the adjustment for each financial statement line item affected
  • Third statement of financial position. IAS 1 Presentation of Financial Statements requires the presentation of a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements in a number of situations, including if an entity applies an accounting policy retrospectively and the retrospective application has a material effect on the information in the statement of financial position at the beginning of the preceding period
  • Earnings per share (EPS). Where applicable to the entity, IAS 33 Earnings Per Share requires basic and diluted EPS to be adjusted for the impacts of adjustments result from changes in accounting policies accounted for retrospectively and IAS 8 requires the disclosure of the amount of any such adjustments.

Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation.

 

New or revised standards

The information below can be used to assist with the disclosure requirements under paragraph 30 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which requires entities to disclose any new IFRS Standards that are in issue but not yet effective and which are likely to impact the entity

New or revised pronouncement Effective date

UK Application at 31 March 2021 to:

1st qtrs 2nd qtrs 3rd qtrs Full yrs

IFRS 17 Insurance Contracts

IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 Insurance Contracts as of 1 January 2021.

Issued: 18 May 2017 (Summary of IFRS 17, Article, Newsletter).

Applicable to annual reporting periods beginning on or after 1 January 2023. The original effective date of IFRS 17 of 1 January 2021 was amended by Amendments to IFRS 17 issued by the IASB in June 2020.

Not yet endorsed for use in the EU or the UK.

Amendments

New or revised pronouncement When effective UK Application at 31 March 2021 to:
1st qtrs 2nd qtrs 3rd qtrs Full yrs

Editorial Corrections (various)

The IASB periodically issues Editorial Corrections and changes to IFRSs and other pronouncements. Since the beginning of calendar 2012, such corrections have been made in February 2012, July 2012, March 2013, September 2013, November 2013 and March 2014, September 2014, December 2014, March 2015, April 2015, September 2015, December 2015, March 2016, May 2016, September 2016, December 2016, September 2017, November 2017, December 2018, March 2019, May 2019, December 2019, July 2020, September 2020, October 2020 and November 2020..

Note: For details of these editorial corrections, see our IASB editorial corrections page.

As minor editorial corrections, these changes are effectively immediately applicable under IFRS See comment in previous column
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4:
  • an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
  • an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.
The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
Issued: 12 September 2016 (article, newsletter)

Overlay approach to be applied when IFRS 9 is first applied. Deferral approach effective for annual periods beginning on or after 1 January 2018.

In June 2020 the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) which changes the fixed expiry date for the temporary exemption (the deferral approach) in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.

 

Optional

Optional

Optional

Optional

Amendments to References to the Conceptual Framework in IFRS Standards


Together with the revised Conceptual Framework published in March 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the IASB in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework.

Issued: 29 March 2018 (article)

Annual periods beginning on or after 1 January 2020

Already applied in prior year (January 2020)

Mandatory

Mandatory

Mandatory

Definition of a Business (Amendments to IFRS 3)

The amendments in Definition of a Business (Amendments to IFRS 3) are changes to Appendix A Defined terms, the application guidance, and the illustrative examples of IFRS 3 only. They:

  • clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;
  • narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;
  • add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;
  • remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and
  • add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

Issued: 22 October 2018 (article/newsletter)


Business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020

Already applied in prior year (January 2020)

Mandatory

Mandatory

Mandatory

Definition of Material (Amendments to IAS 1 and IAS 8)

The amendments in Definition of Material (Amendments to IAS 1 and IAS 8) clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards.

Issued: 31 October 2018 (article)

 

Annual reporting periods beginning on or after 1 January 2020

Already applied in prior year (January 2020)

Mandatory

Mandatory

Mandatory

Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)

The amendments in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) clarify that entities would continue to apply certain hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform.

Issued: 26 September 2019 (article)

Annual reporting periods beginning on or after 1 January 2020

Already applied in prior year (January 2020)

Mandatory

Mandatory

Mandatory

Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)

Extends, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification

The Changes in Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) amend IFRS 16 to

  • permit a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021);
  • require a lessee applying the amendment to do so for annual reporting periods beginning on or after 1 April 2021;
  • require a lessee applying the amendment to do so retrospectively, recognising the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment; and
  • specify that, in the reporting period in which a lessee first applies the amendment, a lessee is not required to disclose the information required by paragraph 28(f) of IAS 8.

Issued: 31 March 2021 (article)

The amendment is effective for annual reporting periods beginning on or after 1 April 2021 (earlier application permitted, including in financial statements not yet authorised for issue at the date the amendment is issued).

Not yet endorsed for use in the EU or the UK.

Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current

Issued: 23 January 2020 (article)

Annual reporting periods beginning on or after 1 January 2023 (see 'Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)' below). Original effective date 1 January 2022.

Not yet endorsed for use in the EU or the UK.

 

 

 

 

Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)

The amendments amend IAS 16 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 recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.

Issued: 14 May 2020 (article, newsletter)

Annual reporting periods beginning on or after 1 January 2022
Not yet endorsed for use in the EU or the UK.

Annual Improvements 2018-2020 Cycle

Makes amendments to the following standards:

  • IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a first-time adopter. The amendment permits a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.
  • IFRS 9 Financial Instruments - Fees in the ‘10 per cent’ test for derecognition of financial liabilities. The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
  • IFRS 16 Leases - Lease incentives. The amendment to Illustrative Example 13 accompanying IFRS 16 removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.
  • IAS 41 Agriculture - Taxation in fair value measurements. The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique. This will ensure consistency with the requirements in IFRS 13.

Issued: 14 May 2020 (article, newsletter)

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


Not yet endorsed for use in the EU or the UK.

Reference to the Conceptual Framework (Amendments to IFRS 3)

The changes:

  • 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 recognise contingent assets acquired in a business combination.

Issued: 14 May 2020 (article, newsletter)

The amendments published today are effective for annual periods beginning on or after 1 January 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

Not yet endorsed for use in the EU or the UK.

Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)

The changes 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).

Issued: 14 MAy 2020 (article, newsletter)

Annual reporting periods beginning on or after 1 January 2022
Not yet endorsed for use in the EU or the UK.

Covid-19-Related Rent Concessions (Amendment to IFRS 16)

Amends IFRS 16 to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification.

The changes:

  • provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification;
  • require lessees that apply the exemption to account for COVID-19-related rent concessions as if they were not lease modifications;
  • require lessees that apply the exemption to disclose that fact; and
  • require lessees to apply the exemption retrospectively in accordance with IAS 8, but not require them to restate prior period figures.

The practical expedient applies to COVID-19-related rent concessions that result in reduction in lease payments due on or before 30 June 2021.

Issued: 28 MAy 2020 (article,newsletter)

 

The amendment is effective for annual reporting periods beginning on or after 1 June 2020.

 

Mandatory

Mandatory

Mandatory

Optional

Amendments to IFRS 17

Amends IFRS 17 to address concerns and implementation challenges that were identified after IFRS 17 Insurance Contracts was published in 2017.

The main changes are:

  • Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning on or after 1 January 2023
  • Additional scope exclusion for credit card contracts and similar contracts that provide insurance coverage as well as optional scope exclusion for loan contracts that transfer significant insurance risk.
  • Recognition of insurance acquisition cash flows relating to expected contract renewals, including transition provisions and guidance for insurance acquisition cash flows recognised in a business acquired in a business combination.
  • Clarification of the application of IFRS 17 in interim financial statements allowing an accounting policy choice at a reporting entity level.
  • Clarification of the application of contractual service margin (CSM) attributable to investment-return service and investment-related service and changes to the corresponding disclosure requirements.
  • Extension of the risk mitigation option to include reinsurance contracts held and non-financial derivatives.
  • Amendments to require an entity that at initial recognition recognises losses on onerous insurance contracts issued to also recognise a gain on reinsurance contracts held.
  • Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts.
  • Additional transition relief for business combinations and additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach.
  • Several small amendments regarding minor application issues.

Issued: 25 June 2020 (article)

 

The amendment is effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted.

Not yet endorsed for use in the EU or the UK.

Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)

The amendment changes the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.

Issued: 25 June 2020 (article)

In June 2020 the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) which changes the fixed expiry date for the temporary exemption (the deferral approach) in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.

Optional

Optional

Optional

Optional

'Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)'

The amendment defers the effective date of the January 2020 amendments (see above) by one year.

Issued: 15 July 2020 (article)

 

The changes in Classification of Liabilities as Current or Non-current — Deferral of Effective Date defer the effective date of Classification of Liabilities as Current or Non-current (Amendments to IAS 1) to annual reporting periods beginning on or after 1 January 2023. Earlier application of the January 2020 amendments continue to be permitted.

Not yet endorsed for use in the EU or the UK.

Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The amendments in Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) introduce a practical expedient for modifications required by the reform, clarify that hedge accounting is not discontinued solely because of the IBOR reform, and introduce disclosures that allow users to understand the nature and extent of risks arising from the IBOR reform to which the entity is exposed to and how the entity manages those risks as well as the entity’s progress in transitioning from IBORs to alternative benchmark rates, and how the entity is managing this transition.

Issued: 27 August 2020 (article)

 

Annual reporting periods beginning on or after 1 January 2021.

Mandatory - endorsed by both the EU and UK.

Optional - Endorsed by both the UK and EU.

Optional - Endorsed by both the UK and EU.

Optional - Endorsed by both the UK and EU.

Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)

The amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the Board has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.

Issued: 12 February 2021 (article)

Annual reporting periods beginning on or after 1 January 2023. Not yet endorsed for use in the EU or the UK.

 

 

 

 

Definition of Accounting Estimates (Amendments to IAS 8)

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The amendments clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error.

Issued: 12 February 2021 (article)

 

 

Annual reporting periods beginning on or after 1 January 2023. Not yet endorsed for use in the EU or the UK.

 

 

 

ACCA (UK Association of Chartered Certified Accountants) (lt green) Image

ACCA publishes a report on climate change reporting by companies within the extractive industries

01 Apr 2021

The Association of Chartered Certified Accountants (ACCA) and the University of Glasgow Adam Smith Business School has published a report containing the results of a study that looked at climate change reporting by mining, oil and gas companies.

The objectives of the study were to:

  • explore the level and depth of climate-related disclosures provided by companies in the extractive industries in the narrative sections (i.e. front end) of their annual reports;
  • explore the level of integration of climate-related information into the accounting policies and relevant financial statements’ notes in the financial reporting section (i.e. back end) of companies’ annual reports; and
  • identify good climate-related reporting practices in both the front and back ends of the annual reports.

The study analysed the 2019 annual reports of 60 publicly listed companies in the extractive industries with the largest carbon emissions during the period 2016–18, measured by their average Scope 1 and Scope 2 carbon emissions3 over the period 2016–18.

Key findings included:

  • Less than a quarter (14 companies) provided scenario analysis that considered/discussed climate change risks.
  • Only 60% (36) identified addressing climate change risk as an integral part of their business model.
  • Just 15 companies (25% of the sample) considered international initiatives for climate change (e.g. the Paris Agreement) in the discussion of their business model.
  • Only four companies (7% of the sample) provided performance indicators where financial and climate change-related information is integrated.
  • Only 10% (6) disclosed that they incorporate climate change risks in their estimations of future cash flows, as part of their impairment testing calculations.
  • None of the sample companies identified climate change risk as an important factor in determining their assets’ useful lives.
  • In only 15% of the sample companies’ audit reports (9) was climate change risk identified as a key audit matter.

The report notes that:

Companies do not sufficiently engage with disclosures about their climate change-related risks. Companies are found to provide, on average, overly generic disclosures and they refrain from discussing how climate change risks affect their operations. Furthermore, only a small number of companies acknowledge the central role of climate change on their current and future activities. Our findings indicate that both the front and back ends of companies’ annual reports lack clarity of and depth in climate change related disclosures. Also, it has become evident that the two ends of the annual report are relatively disconnected, as companies provide more information about their climate change-related risks in the front end than in the back end. Thus, it appears that financial reporting does not follow narratives in considering the effects of climate change on companies’ operations.

A press release and the full report are available on the ACCA website.

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