This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

2019

EC expert group issues report on disclosure of climate-related information

10 Jan 2019

The Technical Expert Group on Sustainable Finance set up by the European Commission (EC) has published its first report on companies' disclosure of climate-related information. It contains recommendations that will allow the EC to update its non-binding guidelines on non-financial reporting with specific reference to climate-related information, in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board.

The report marks another step in the implementation of the EC's action plan on sustainable finance published in March 2018 and follows up on the EC's legislative proposal on the disclosure of climate-related information presented in May 2018.

The report contains proposals for disclosing not just how climate change might influence the performance of a company, but also the impact of the company itself on climate change.

The guidance proposed in the report intends to assist companies in developing high quality climate-related disclosures that comply with the Non-Financial Reporting Directive and address the recommendations of the TCFD. Specific disclosures and guidance are described under each element of the Non-Financial Reporting Directive requirements, including metrics for all in-scope companies, for non-financial companies, and for banks and insurance companies. In doing so, the report distinguishes between three types of disclosure:

  • Type 1 disclosures – those that companies should disclose (high expectation that all reporting companies disclose them)
  • Type 2 disclosures – those that companies should consider disclosing (expected of companies with significant exposure to climate-related risks and opportunities)
  • Type 3 disclosures – those that companies may consider disclosing (additional or innovative disclosures that provide more enhanced information)

The EC will take the report into consideration when it updates the non-binding guidelines on non-financial disclosure that accompany the Non-Financial Reporting Directive.

Stakeholders are invited to provide with written comments on the report by February 1, 2019.

Review the Report on Climate-related Disclosures on the EC website.

EC expert group issues report on disclosure of climate-related information

10 Jan 2019

The Technical Expert Group on Sustainable Finance set up by the European Commission (EC) has published its first report on companies' disclosure of climate-related information. It contains recommendations that will allow the EC to update its non-binding guidelines on non-financial reporting with specific reference to climate-related information, in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board.

The report marks another step in the implementation of the EC's action plan on sustainable finance published in March 2018 and follows up on the EC's legislative proposal on the disclosure of climate-related information presented in May 2018.

The report contains proposals for disclosing not just how climate change might influence the performance of a company, but also the impact of the company itself on climate change.

The guidance proposed in the report intends to assist companies in developing high quality climate-related disclosures that comply with the Non-Financial Reporting Directive and address the recommendations of the TCFD. Specific disclosures and guidance are described under each element of the Non-Financial Reporting Directive requirements, including metrics for all in-scope companies, for non-financial companies, and for banks and insurance companies. In doing so, the report distinguishes between three types of disclosure:

  • Type 1 disclosures – those that companies should disclose (high expectation that all reporting companies disclose them)
  • Type 2 disclosures – those that companies should consider disclosing (expected of companies with significant exposure to climate-related risks and opportunities)
  • Type 3 disclosures – those that companies may consider disclosing (additional or innovative disclosures that provide more enhanced information)

The EC will take the report into consideration when it updates the non-binding guidelines on non-financial disclosure that accompany the Non-Financial Reporting Directive.

Stakeholders are invited to provide with written comments on the report by 1 February 2019.

Please click to access the Report on Climate-related Disclosures on the EC website.

EFRAG TEG appointment and reappointments

09 Jan 2019

The Board of the European Financial Reporting Advisory Group (EFRAG) has announced the appointment of Isabelle Grauer-Gaynor to its Technical Experts Group (TEG).

In addition, EFRAG has reappointed the following members: Geert Ewalts, Günther Gebhardt, Heinz Hense, Andrew Spooner, and Ambrogio Virgilio. The EFRAG TEG composition becomes effective on 1 April 2019.

For more information, see the press release on the EFRAG website. The press release also notes that a new TEG Chairman will be announced "in due course".

CMAC call for members

08 Jan 2019

The IASB's Capital Markets Advisory Committee (CMAC) is currently seeking applications for membership after the terms of a number of members expire at the end of 2019. New candidates would join the CMAC for a three-year term beginning 1 January 2020, renewable once for an additional three-year term.

The CMAC is a group of professional financial analysts who meet three times a year with members of the IASB to provide the views of professional investors on financial reporting issues.

For more information, see the press release on the IASB's website.

Pre-meeting summaries for the January 2019 IFRS Interpretations Committee meeting

07 Jan 2019

The IFRS Interpretations Committee will meet via Video Conference Call on Wednesday 16 January 2019. The Committee will discuss four tentative agenda decisions. The meeting starts at 12 noon London time and the meeting is scheduled to last just over one hour.

The Committee will consider recommendations from the staff to finalise the following:

  1. IAS 37 Provisions, Contingent Liabilities and Contingent Assets: whether a voluntarily payment made by an entity to a tax authority in relation to a disputed assessment (to avoid possible penalties or interest) is an asset.
  2. IFRS 15 Revenue from Contracts with Customers: whether fees for admitting an entity to a stock exchange and fees for an ongoing listing service are distinct or relate to only one service.
  3. IAS 27 Separate Financial Statements: when an entity loses control of a subsidiary as a result of disposing some of its interest, can the entity elect to measure the retained interest at FVOCI and can any gain or loss on initial disposal be presented in profit or loss.
  4. IAS 27 Separate Financial Statements: whether the cost of a subsidiary acquired in stages is the fair value of the tranches (as deemed cost) or the sum of the consideration actually paid.

Other work in progress

The Committee will discuss feedback on tentative agenda decisions in relation to the application of the highly probable requirement in a cash flow hedge relationship and the recognition of a lease liability by a joint operator at a future meeting. 

The staff are working on potential amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates to provide more guidance when a spot exchange rate is not observable.

The staff are analysing requests in relation to (a) whether an entity applies IFRS 16 Leases or IAS 38 Intangible Assets to a contract that gives it rights to space below the ground for a period of time; and (b) whether the right to potential discounts affects the classification of an entity’s pension plan as defined benefit or defined contribution.

The full agenda for the meeting and our pre-meet­ing summaries can be found here. We will update this page for any changes to the agenda and our Deloitte observer notes from the meeting as they become available.

IVSC consults on the valuation of non-financial liabilities

07 Jan 2019

The International Valuation Standards Council (IVSC) has published an exposure draft IVS 220 'Non-Financial Liabilities' for public comment.

The IVSC's project on the valuation of non-financial liabilities resulted from feedback received during its agenda consultation process conducted in 2017 and 2018.

In the introductory comments, the IVSC notes that the determination of whether a liability is financial or non-financial may be difficult. While non-financial liabilities have limited accounting and valuation guidance, financial liabilities are often subject to specific accounting, valuation, and regulatory requirements (the exposure draft contains extensive references to both IFRSs and US GAAP). Therefore, the IVSC warns that valuers must use judgement and rely on the applicable accounting and/or regulatory guidance when defining the subject liability as non-financial or financial.

Please click to access the exposure draft on the IVSC website. Comments are requested by 1 April 2019.

Agenda for the January 2019 IFRS Interpretations Committee meeting

04 Jan 2019

The IASB's IFRS Interpretations Committee will be meeting by video conference call on 16 January 2019. The Committee will discuss four agenda decisions to finalise and the Committee's work in progress.

The meeting starts at 12 noon London time and is scheduled to last 70 minutes.

The agenda for the meeting can be found here. We will update this page for any changes to the agenda and our Deloitte pre-meeting summaries and observer notes from the meeting as they become available.

AAOIFI issues two new financial accounting standards

04 Jan 2019

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has issued financial accounting standard (FAS) 33 'Investments in Sukuk, Shares and Similar Instruments' and FAS 34 'Financial Reporting for Sukuk-holders'.

FAS 33, which supersedes FAS 25, sets out improved principles for classification, recognition, measurement, presentation and disclosure of investment in Sukuk, shares and other similar instruments of investments made by Islamic financial institutions in line with Sharia’a principles. It defines the key types of instruments of Sharia’a compliant investments and defines the primary accounting treatments commensurate to the characteristics and business model of the institution under which the investments are made, managed and held.

FAS 34 aims to establish the principles of accounting and financial reporting for assets and businesses underlying the Sukuk to ensure transparent and fair reporting to all relevant stakeholders, particularly including Sukuk-holders.

The two standards are effective for financial periods beginning on or after 1 January 2020 with earlier adoption permitted. The press release on the AAOIFI website offers more information and access to the new standards.

Recent sustainability and integrated reporting developments

03 Jan 2019

A summary of recent developments at IRC, SSE, and GRI.

The Integrated Reporting Committee (IRC) of South Africa has released its latest technical paper Achieving Balance in the Integrated Report. The Paper discusses the role of the governing body, the meaning of balanced reporting, challenges and weaknesses, and lists some key considerations in achieving a balanced integrated report. Please click for access to the report on the IRC website.

The United Nation's Sustainable Stock Exchanges (SSE) initiative has launched a new searchable database of stock exchanges’ sustainability activities. to provide easier access to sustainability information on over 90 stock exchanges worldwide. The new database interface allows users to filter the SSE’s Fact Sheets for particular activities, and gives users a quick view of what markets provide particular sustainability instruments such as mandatory ESG disclosure or a sustainability themed bond segment. Please click for more information on the SSE website.

In addition, the SSE notes the following developments:

  • Saudi Arabia’s stock exchange, Tadawul, has announced its voluntary commitment to promoting sustainable and transparent capital markets in becoming an SSE partner stock exchange (press release).
  • The Nigerian Stock Exchange has published sustainability disclosure guidelines for the Nigerian market (press release).
  • The National Stock Exchange of Costa Rica has created sustainable voluntary guidance to help issuers in preparing and disclosing information about ESG criteria (press release).

The Global Reporting Initiative (GRI) has announced a draft standard on tax and payments to governments for public comment. The draft standard is expected to make a pioneering stride in tax transparency by combining management approach disclosures on tax strategy, with country-by-country reporting of an organisation’s business activities and taxes paid. Please click for more information on the GRI website.

Charity Commission publishes reviews into the quality of charity annual reports and accounts

02 Jan 2019

The Charity Commission has published the findings of two reviews which looked at whether charity annual reports and accounts meet user needs and at how well charities are meeting their public benefit reporting requirements.

The first report, Public reporting by charities in their trustees’ annual report and accounts, focuses on whether the set of accounts reviewed “met the basic requirements of the users of those accounts rather on strict technical compliance with the Statement of Recommended Practice (SORP) and other reporting requirements”. The review assessed whether each set of accounts contained:

  • a trustees’ annual report, explaining what activities the charity had carried out during the year to achieve its purposes;
  • the report of an independent scrutiny of the charity’s accounts, with an audit carried out if required due to the charity’s size;
  • the accounts themselves, prepared on an accruals (or SORP) basis if required due to the charity’s size or because it is a company.

In addition the Charity Commission checked whether the accounts were complete, containing both a statement of financial activities (SOFA), that analyses the charity’s expenditure, and a balance sheet (or the equivalent if receipts and payments accounts were prepared) and that these documents were consistent with each other.

Samples of charity accounts, with incomes over £25,000, were taken from the register of charities in May 2018. 105 charities were reviewed for accounting years ending during the 12 months to 31 December 2016.

It was found that 70% (74% in the prior year) of charity accounts reviewed “met the basic benchmark”. For those charities that did not meet the required standard reasons included:

  • For 12% of the sample, although all of the required documents were submitted, one of them was not considered adequate. These charities’ sets of accounts met most of the required criteria, but many of them provided little or no information on the charity’s purposes and/or activities carried out to achieve them.
  • For 9% of the sample, although all of the required documents were submitted, at least two of them were not considered adequate. As with the first group of charities, most of these sets of accounts provided little or no information on the charity’s purposes and/or activities carried out to achieve them. However, this was coupled with other issues, such as incomplete accounts, an independent scrutiny report that did not have the required wording or an overall lack of transparency.
  • For 9% of charities at least one of the required documents was missing. None of these charities submitted any form of independent scrutiny report. In addition, all of them were either missing at least one of the trustees’ annual report and accounts or the documents submitted were inadequate

The Charity Commission reminds charities that “the trustees’ annual report and accounts provide an important opportunity for trustees to reflect on what their charity has achieved and demonstrate to the charity’s supporters, potential funders and the public that they have managed its resources effectively and are meeting its purpose”. It also highlights to charities that there are a number of resources to assist trustees and independent examiners on the preparation and scrutiny of the annual report and accounts including pro-formas of the trustees’ annual report, independent examiners report and both receipts and payments and accruals accounts. Guidance can be downloaded at GOV.UK here.

Public benefit reporting

The second report, Public benefit reporting by charities, looked at the quality of public benefit reporting.   All registered charities are required to publish a trustees’ annual report which sets out the activities that the charity has undertaken for the public benefit. Charities are also required to include a statement as to whether they have had due regard to the Charity Commission’s guidance on public benefit.

The focus of the review was on whether each trustees’ annual report demonstrated a clear understanding of the public benefit reporting requirement. The review considered whether the trustees’ annual report contained:

  • An explanation of the activities undertaken by the charity to further its purposes for the public benefit.
  • A statement by the trustees as to whether they have had due regard to the Charity Commission’s guidance on public benefit, known as ‘the public benefit statement’

The report reviewed public benefit reporting of 105 charities with incomes over £25,000 for financial years ending in the 12 months to 31 December 2016.

Findings indicate that the percentage of charities’ annual reports that demonstrated a clear understanding of the public benefit reporting requirement was similar to the prior year (51%) at 52%.

The Charity Commission reminds trustees of the resources that are available to assist with public benefit reporting including its pro-forma trustees’ annual reports.   Guidance can be downloaded at GOV.UK here.

Click for (all links to Charity Commission 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.