January

IFRS Foundation appoints new IASB Board member

20 Jan, 2020

The Trustees of the IFRS Foundation have announced the appointment of Bruce Mackenzie as IASB Board member.

Mr Mackenzie is currently serving as a member of the IFRS Interpretations Committee, where his term ends 30 June 2020. He is a chartered accountant and registered auditor in South Africa, has been a member of the Financial Reporting Standards Council of South Africa, and chairs the Pan African Federation of Accountants’ (PAFA) technical standard-setters forum. Mr Mackenzie will fill the Africa seat, succeeding Darrel Scott, who steps down at the end of September 2020.

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

IFRS Interpretations Committee holds January 2020 meeting

23 Jan, 2020

The IFRS Interpretations Committee held a video meeting on Tuesday 21 January 2020 to finalise one agenda decision. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

Agenda decision to finalise

IFRS 16 Leases—Definition of a Lease-Shipping Contract: The Committee decided, by a vote of 11, to finalise the agenda decision with two amendments to wording.

Work in progress

There were no new matters that have not yet been presented to the Committee.

More information

Please click to access the detailed notes taken by Deloitte observers.

IPSASB publishes 'Improvements to IPSAS, 2019'

31 Jan, 2020

The International Public Sector Accounting Standards Board (IPSASB) has published a final pronouncement 'Improvements to IPSAS, 2019', which contains amendments to International Public Sector Accounting Standards (IPSAS) to address issues raised by stakeholders.

This year, the improvement cycle does not include amendments that aim at convergence with recent IASB amendments.

The amendments that are the result of IPSAS 41 Financial Instruments are effective for periods beginning on or after 1 January 2022.

All other amendments are effective for periods beginning on or after 1 January 2021.

Please click for the following information on the IPSASB website:

New report from the International Integrated Reporting Council (IIRC): ‘Integrated Thinking & Strategy: State of play report’

23 Jan, 2020

The International Integrated Reporting Council’s (IIRC's) Integrated Thinking & Strategy Group has published a new report setting out how best to adopt integrated thinking and enhance strategy to achieve long-term value creation.

The group is made up of over 50 organisations globally that have convened to develop a model and share expert insights.

The model that they have developed is defined as follows: ‘Integrated thinking is a multi-capital management approach that enables organizations to deliver their purpose to the benefit of their key stakeholders overtime. It is about creating and preserving value and enabling better decision-making based on interconnected, multi-capital information.’

The group’s underlying thinking comes from the fundamental concepts and other aspects of the International <IR> Framework and therefore aims to make an explicit link between reporting and enhanced decision-making within the organisation. The report therefore considers, for example:

  • How taking a broader and more integrated view of the resources (‘capitals’) that organisations rely on to create value can be used in decision-making.
  • Better understanding of factors in value creation and how these are realised over time – especially in the longer term.
  • Better alignment of the company with its role in relation to society and the environment (which the report calls ‘system value’).
  • An enhanced ability to understand and make decisions on optimising value creation, taking into account longer-term performance, the needs of stakeholders, and the impacts on the capitals that are used in the value creation process.

In his foreword to the report, IIRC Chair Emeritus Professor Judge Mervyn King writes:

A collaborative management culture, a multicapital mindset and outcome-based corporate governance – these are the building blocks of integrated thinking, the output of which is an integrated report. Above all, integrated thinking is a unifying concept and a strategic tool that helps management to bring order to the manifestly complex environment in which businesses must operate in the 21st century.

The report’s authors invite feedback on the initial ideas set out in the report and promise a further paper at the end of 2020.  Our report A Directors Guide to Integrated Reporting is available here.

Pre-meeting summaries for the January IASB meeting

24 Jan, 2020

The IASB will meet in London on 28–30 January 2020 to discuss twelve topics. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed, we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

Provisions (Thu 0945-1030): The staff recommend that the Board add a project to amend IAS 37 to align the IAS 37 liability definition and requirements for identifying liabilities with the Conceptual Framework (including potentially withdrawing IFRIC 21); clarifying which costs to include in the measure of a provision; and specifying whether the rate at which an entity discounts a provision for the time value of money should reflect the entity’s own credit risk.

Amendments to IFRS 17 Insurance Contracts (Thu 1320-1535): The Board will discuss some of the topics where it had decided to consider the feedback from respondents further, specifically:

  • the scope exclusion from IFRS 17 for some credit card contracts (recommend confirm the proposed scope exclusion with some changes);
  • Transition—the prohibition from applying the risk mitigation option retrospectively (recommend to retain, unchanged);
  • Business combinations—contracts acquired in their settlement period (recommendation to retain, unchanged);
  • Interim Financial Statements (recommend changing the requirements); and
  • Asset for insurance acquisition cash flows—transition and business combinations (recommend changing the requirements).

IBOR Reform and the Effects on Financial Reporting (Thu 1050-1220): The Board will consider recommendation from the staff in relation to the end of application of the Phase 1 exceptions from specific hedge accounting requirements in IFRS 9 and IAS 39 in the context of interest rate benchmark reform (IBOR reform); the potential effects of IBOR reform on IFRS Standards other than those related to financial instruments accounting; and potential disclosure requirements to accompany the tentative decisions the Board has made during Phase 2 of the IBOR project.

Pension Benefits that Depend on Asset Returns (Wed 1530-1600): The staff are recommending that the Board consider amending IAS 19 to cap the projected cash flows when benefits vary with the level of returns on specified assets, so that they do not exceed the discount rate specified by IAS 19. The change would be to address the inconsistency in IAS 19 that the variability (risk) in the future asset returns is reflected only in the cash flows and not in the discount rate applied to those cash flows. The staff are asking Board members for comments.

Disclosure Initiative (Wed 1630-1800): The Board will continue its discussions of potential revisions to the disclosure requirements in IAS 19 and recommend that the Board refine some of its tentative decisions relating to defined benefit plans, multi-employer plans and group plans. 

IFRS 3 reference to the Conceptual Framework (Thu 0930-0945): The staff recommend that the effective date of the updated references to the Conceptual Framework in IFRS 3 be 1 January 2022. The new references would apply to business combinations that occur in any annual reporting period starting after that date, with earlier application permitted.

Subsidiaries that are SMEs (Tue 1100-1230): The staff recommend that the Board develop an ED as soon as possible proposing reduced disclosure requirements for subsidiaries that are SMEs.

Business Combinations under Common Control (Wed 1400-1530): The Board has decided that the acquisition method, as set out in IFRS 3, should be required for listed acquirers that have NCI. They have received feedback from some sectors that a predecessor should apply to all common-control business combinations. The staff recommend no change to the decisions already made.  The staff also set out their recommendations for recognition and measurement applying a predecessor approach.

The staff will give updates on:

  • the feedback received on the proposed update to the IFRS Taxonomy to reflect the amendments made to IFRS Standards in 2019 in response to IBOR reforms (Thu 1535-1605);
  • the ED for rate-regulated activities (Thu 1045-1050);
  • work being undertaken on research projects and the research pipeline (Thu 1030-1045); and
  • recent activities of the IFRS Interpretations Committee (Wed 1600-1615).

More information

Our pre-meeting summaries are available on our January meeting notes page and will be supplemented with our popular meeting notes after the meeting.

Recent sustainability and integrated reporting developments

29 Jan, 2020

A summary of recent developments at Carrots & Sticks/the Reporting Exchange, CDSB, IRC, A4S, GRI, ICAEW, EFRAG, and SSE.

Carrots & Sticks and the Reporting Exchange have collaborated to improve access to reliable and comparable information by aligning taxonomies. Jointly, the newly aligned systems give public and private sector users an overview of hundreds of reporting provisions covering the world’s 70 largest economies. This includes mandatory and voluntary requirements and guidance from regulators, capital markets, professional associations, industry bodies and other organisations. Please click for more information and access to the systems.

The Climate Disclosure Standards Board (CDSB) has announced the launch of a consultation with the aim of accelerating the rate of nature-related financial disclosures at scale by organisations globally and exploring the role of the CDSB Framework in facilitating this. Please click for more information and access to the consultation.

The Integrated Reporting Committee (IRC) of South Africa has developed an information paper to assist organisations with their disclosure of the information regarding outlook. The paper aims to inform those preparing integrated reports, as well as executives and members of the governing body who are responsible for guiding and approving integrated reports. Please click for more information and access to the information paper.

Accounting for Sustainability (A4S) has released Financing our Future (Update), which updates the September 2018 report of the same title and also contains five overarching recommendations, one of which regards sustainability reporting and calls for the adoption of global reporting standards and the use of consistent terminology. Please click for more information and access to the original and the updated report.

The Global Reporting Initative has announced the launch of a new tax reporting standard that seeks to ensure multinationals are much clearer about how much – and where – they pay their taxes (more information) as well as the launch of a new toolkit to advance reporting on modern slavery (more information).

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar looking at the Task Force on Climate-related Financial Disclosures' recommendations in more detail. Please click for more information.

The European Corporate Reporting Lab @EFRAG announces a launching event of a report on Climate-related Reporting, on 6 February. The report focuses on good reporting practice examples from Europe and beyond related to general climate-related disclosures and scenario analysis. Please click for more information and registration.

The United Nation's Sustainable Stock Exchanges (SSE) initiative announces that The Athens Stock Exchange, a member of the initiative since 2018, published its first ESG reporting guide. Please click for more information and access to the guide.

Summary of the December 2019 MCCG meeting

13 Jan, 2020

The IASB has published a summary of the Management Commentary Consultative Group (MCCG) meeting held on 13 December 2019.

The meeting focused on topics for further input, an overview of the staff’s current proposals, and supporting the adoption of the Practice Statement.

The topics for further input were:

  • information on intangibles and ESG matters in management commentary;
  • the meaning of ‘management’s view’;
  • the entity’s purpose; and
  • guidance on narrative coherence.

For more information, see the summary on the IASB website.

Updated IASB work plan — Analysis (January 2020)

31 Jan, 2020

Following the IASB's January 2020 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments since the work plan was last revised in December 2019.

Below is an analysis of all changes made to the work plan since our last analysis on 14 December 2019.

Standard-setting projects

  • Primary Financial Statements — After publishing an exposure draft in December 2019, the next milestone for this project is now exposure draft feedback. Comments are due by 30 June 2020.
  • Rate-regulated Activities —  An exposure draft is now expected in H2 2020 (formerly H1 2020).
  • Subsidiaries that are SMEs — After reviewing research at the January 2020 Board meeting, the Board decided to elevate this project to a standard-setting project. The next milestone is now  a decision on whether to proceed with a discussion paper or exposure draft. No date is listed.

Maintenance projects

  • 2019 Comprehensive Review of the IFRS for SMEs Standard — After publishing its Request for Information earlier this month, the next milestone for this project is feedback. Comments are due by 27 July 2020.
  • Amendments to IFRS 17 Insurance Contracts — An IFRS amendment is now expected in Q2 2020 (formerly H1 2020).
  • Annual improvements — 2018-2020 cycle — Final amendments are now expected in April 2020 (formerly Q2 2020). The following projects are part of the annual improvements:
    • Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities (Amendments to IFRS 9)
    • Lease Incentives (Amendment to Illustrative Example 13 accompanying IFRS 16)
    • Subsidiary as a First-time Adopter (Amendment to IFRS 1)
    • Taxation in Fair Value Measurements (Amendment to IAS 41)
  • Classification of Liabilities as Current or Non-current (amendments to IAS 1) — Removed from the work plan after publishing an IFRS amendment earlier this month.
  • Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12) — Exposure draft feedback is now expected in Q2 2020 (formerly Q1 2020).
  • IBOR Reform and its Effects on Financial Reporting—Phase 2 — An exposure draft is now expected in April 2020 (formerly Q2 2020).
  • Lack of Exchangeability (Amendments to IAS 21) — The milestone has shifted from "work in progress" to an exposure draft. No expected date is listed.
  • Onerous Contracts—Cost of Fulfilling a Contract (Amendments to IAS 37) — An IFRS amendment is now expected in Q2 2020 (formerly H1 2020).
  • Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) — An IFRS amendment is now expected in March 2020 (formerly Q1 2020).
  • Provisions—Targeted Improvements — After reviewing research at the January 2020 Board meeting, the Board decided to elevate this project to a maintenance project. The next milestone is to decide the project direction. No expected date is listed.
  • Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) — An IFRS amendment is now expected in April 2020 (formerly Q2 2020).

Research projects

  • Business Combinations under Common Control — A discussion paper is now expected in Q2 2020 (formerly H1 2020).
  • Dynamic Risk Management — Core model outreach is now expected in Q2 2020 (formerly H1 2020).
  • Extractive Activities — Review research is now expected in Q2 2020 (formerly H1 2020).

Other projects

  • Due Process Handbook Review — After discussing the feedback received on the proposed amendments, the DPOC decided to move forward with final amendments. No expected date is listed.
  • IFRS Taxonomy Update—Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) — After a discussion at the January 2020 Board meeting, the next milestone is an IFRS Taxonomy Update, expected in March 2020.

The above is a faithful comparison of the IASB work plan at 14 December 2019 and at 31 January 2020. For access to the current IASB work plan at any time, please click here.

WEF consultation paper on common metrics for sustainability reporting

22 Jan, 2020

At the 2020 annual meeting in Davos-Klosters, the World Economic Forum (WEF) released a consultation paper titled 'Toward Common Metrics and Consistent Reporting of Sustainable Value Creation'. The paper proposes two related sets of metrics, a set of core metrics and a set of expanded metrics.

The metrics are drawn wherever possible from existing standards and disclosures (such as GRI, SASB, TFCD, etc.):

  • Core metrics: A set of 22 well-established metrics and reporting requirements. These are primarily quantitative metrics for which information is already being reported by many firms (albeit often in different formats) or can be obtained with reasonable effort. They focus primarily on activities within an organisation’s own boundaries.
  • Expanded metrics: 34 metrics. These tend to be less well established in existing practice and standards and have a wider value chain scope or convey impact in a more sophisticated or tangible way, such as in monetary terms. They represent a more advanced way of measuring and communicating sustainable value creation, and companies are encouraged to report against them as well, when material and appropriate.

The paper is open for comments until 5 June 2020.

Please click for the following additional information on the WEF website:

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