May

IASB proposes to defer effective date of IAS 1 amendments

04 May, 2020

The International Accounting Standards Board (IASB) has published an exposure draft 'Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Proposed amendment to IAS 1)' proposing to defer the effective date of the January 2020 amendments to IAS 1 by one year. Comments are requested by 3 June 2020.

Background

On 23 January 2020, the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1) providing a more general approach to the classification of liabilities under IAS 1 Presentation of Financial Statements based on the contractual arrangements in place at the reporting date. The amendments currently have an effective date of 1 January 2022.

In April 2020, the IASB held a supplementary IASB meeting to consider COVID-19-related matters including the Board's timelines in view of the COVID-19 pandemic. The Board tentatively decided to delay by one year 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.

The proposed amendment published today is solely seeking to delay the effective date of the January 2020 amendments by one year.

 

Suggested changes

The changes proposed in ED/2020/3 Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Proposed amendment to IAS 1) would 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 would continue to be permitted.

 

Comment period

Comments on the exposure draft are requested by 3 June 2020. The shortened comment period of 30 days was approved in a DPOC meeting on 16 April 2020.

Additional information

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IASB publishes amendments to IFRS 3 to update a reference to the Conceptual Framework

14 May, 2020

The International Accounting Standards Board (IASB) has published 'Reference to the Conceptual Framework (Amendments to IFRS 3)' with amendments to IFRS 3 'Business Combinations' that update an outdated reference in IFRS 3 without significantly changing its requirements.

 

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 recognised.

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 finalised.

 

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 recognise contingent assets acquired in a business combination.

 

Effective date

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.

 

Additional information

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IASB releases podcast on IFRS 17 (May 2020)

26 May, 2020

The IASB has released a podcast featuring IASB member Darrel Scott and technical staff member Vitalina Kobernik as they discuss the developments at the May 2020 Board meeting related to the amendments to IFRS 17 'Insurance Contracts'.

The amendments to IFRS 17 are being finalised by the staff. During this process the staff identified five (sweep) issues for which the Board decided to make additional changes to the standard, along with two other matters that were identified after the staff paper had been distributed.

The podcast can be accessed through the press release on the IASB website.

Our comprehensive meeting notes from the session are available here.

IASB votes to finalise IFRS 16 amendment

15 May, 2020

In a supplementary meeting today, the IASB considered the feedback it received on its 24 April exposure draft 'Covid-19-Related Rent Concessions (Proposed amendment to IFRS 16)' that contained a proposed amendment that would provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. The 14-day comment letter period closed on 8 May 2020 and the Board received 110 comment letters (including late submissions).

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 1 June 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 to 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 28 May 2020.

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

ICAEW and ICAS produce guidance for SME businesses on going concern and COVID-19

22 May, 2020

The Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of Scotland (ICAS) have prepared a guide to assist owners and directors of SME businesses in assessing going concern in light of COVID-19.

The publication explains the importance of assessing going concern and outlines some factors to consider when making this assessment.

The full publication is available on the ICAEW website.

ICAEW publishes a two-part guide on COVID-19 considerations for auditing going concern and reporting of material uncertainties

04 May, 2020

The Institute of Chartered Accountants in England and Wales (ICAEW) Financial Reporting Faculty has published a two part guide for auditors covering COVID-19 considerations for auditing going concern, and how to report when a material uncertainty relating to going concern exists. The guide builds upon the Financial Reporting Council’s (FRC’s) March 2020 Bulletin for auditors which set out considerations for auditors in relation to COVID-19.

The first part of the guide provides advice for auditors when testing the going concern assessments of reporting entities impacted by COVID-19. It offers practical considerations in relation to ISA 570 requirements. It covers:

  • the going concern basis of accounting;
  • auditing going concern; and
  • concluding on going concern

The second part of the guide sets out the steps auditors need to take to ascertain whether material uncertainty disclosures in relation to going concern in the financial statements are adequate, and how these disclosures will then impact the audit report. It supplements the guidance in the Financial Reporting Faculty’s audit report guides. It covers:

  • determining whether there are material uncertainties;
  • determining whether disclosures are adequate;
  • how auditors should approach disclosures included within other information;
  • how to make the necessary changes to the auditor’s report;
  • how to report on key audit matters; and
  • what to do if the auditor concludes that disclosures are not adequate

A press release and the two part guide is available on the ICAEW website. Our news item on the FRC’s March 2020 Bulletin for auditors is here.

IFRS Foundation Trustee discusses sustainability reporting

13 May, 2020

In a virtual presentation at the Green and Sustainable Finance Cross-Agency Steering Group meeting, IFRS Foundation Trustee Teresa Ko discussed the possible roles the IFRS Foundation may have for the development of internationally recognised standards on sustainability reporting.

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.

The full presentation is available on the IASB’s website.

IFRS Interpretations Committee holds April 2020 meeting

01 May, 2020

The IFRS Interpretations Committee met via video conference on 29 April 2020. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

Comments on Tentative Agenda Decision

IAS 12 Income Taxes—Multiple Tax Consequences of Recovering an Asset (Agenda Paper 2): The Committee decided to finalise the agenda decision, with some suggested changes to the drafting.

Research Summary

Supply Chain Financing—Reverse Factoring (Agenda Paper 3): The Committee members provided suggestions for the questions to be addressed in the upcoming agenda paper for supply chain financing.

More Information

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

IIRC publishes consultation draft of its revised Framework

22 May, 2020

In February 2020, the International Integrated Reporting Council (IIRC) launched the revision of the International <IR> Framework and called for market feedback on specific themes to inform the nature and direction of the revision. A consultation draft of the revised Framework has now been released for a 90 day comment period.

The consultation draft has been informed by the 300 responses the IIRC received on three topic papers published in February, ongoing observation of market practice internationally, as well as the detailed deliberations of the IIRC’s Framework Panel, a diverse group of reporting experts from the business, investor and accountancy communities. Feedback on the draft is requested through an online survey and via participation in one of over 20 virtual roundtables hosted by the IIRC’s partners globally.

Please click for more information, access to the draft and access to a companion document setting out the basis for the proposed Framework revisions on the IIRC website.

May 2020 IASB meeting agenda posted

07 May, 2020

The IASB has posted the agenda for its next meeting, which will be held via video conference on 20–21 May 2020. There are six topics on the agenda.

The Board will discuss the following:

    • Amendments to IFRS 17 Insurance Contracts
    • Management commentary
    • Research programme update
    • Maintenance and consistent application
    • IBOR reform and the effects on financial reporting (oral update)
    • Disclosure initiative — accounting policies

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries, as well as observer notes from the meeting on this page as they become available.

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