The podcast discusses:

• Management Commentary;
• Rate-regulated Activities;
• Business Combinations under Common Control;
• Extractive Activities; and
• Maintenance and consistent application.

The podcast (12 minutes) can be accessed through the press release on the IASB website.

The detailed notes taken by Deloitte observers at the meeting are available here.

The new set of editorial corrections affect the Red Book and the annotated Red Book 2020 as well as the Blue Book and the annotated Blue Book 2020 regarding IFRS 7 Financial Instruments: Disclosures, IFRS 9 Financial Instruments and the glossary. The only stand-alone standard affected is IFRS 17 Insurance Contracts.

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The editorial corrections can be viewed on the editorial corrections page of the IASB's website.

The errata affect the numbering of paragraphs in IFRS 9 Financial instruments.

Editorial corrections and errata do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The list of errata can be viewed on the editorial corrections page of the IASB's website.

The guidance is aimed at companies applying FRS 102 and identifies some key areas where entities might need to consider the impact of COVID-19 when preparing disclosures within their annual report and accounts. It is not intended as a disclosure checklist but rather to highlight factors to consider in the current environment.  The guidance also refers to another ICAEW Financial Reporting Faculty checklist for guidance on recognition and measurement.  

The guidance covers a number of areas of disclosure including:

• Accounting policies
• Significant judgements
• Key sources of estimate uncertainty
• Changes in estimates
• Fair value of investment property
• Going concern
• Post balance-sheet events
• Impairment of assets
• Government grants
• Provisions
• Insurance policies
• Termination benefits

Additionally the guidance addresses the presentation requirements for material items and alternative performance measures and factors to consider when preparing the strategic report.

A press release and the guidance is available on the ICAEW website.

The review detail the findings from reviews of 960 audit files across a wide range of firms. The ICAEW indicates that the majority of the files reviewed “achieved the standards expected, with good practice in many areas”. However, it does express concern that 18% of audits required improvements and 8% needed significant improvement.

The report is split in two parts. It explains:

• how firms can improve the quality of their audit work based on the findings of the ICAEW’s Quality Assurance reviews during 2019;
• the changes ICAEW require firms to make including the introduction of root cause analysis; and
• the importance of audit quality, the future of audit and ICAEW’s approach to monitoring.

The report details that improvements can be made regarding: 

• Auditor scepticism, robust management challenge and sufficient audit documentation in three key areas that rely on significant judgement:
  • Going concern
  • Long-term construction contracts
  • Property valuations
• Documentation/evidence on the audit file supporting responses in audit work programmes and checklists and work performed. Additionally documentation of consideration of estimates, judgements and uncertainties.

Whilst the findings from the report note that audits need to improve in certain areas, overall, the 2019 results found a slight reduction in the most serious cases referred to the independent Audit Registration Committee (ARC) for it to consider taking action.

As well as identifying key areas for improvement the report also highlights examples of good practice. The report identifies regular external cold file reviews, and the effective use of root cause analysis as key tools for driving improvement

A press release and link to the full report is available on the ICAEW website here.

IFAC calls for the IFRS Foundation to create an International Sustainability Standards Board (ISSB). This new Board could leverage the independence and success of IFRS governance to develop global standards and rationalise the current fragmented ecosystem. As with the IASB, clear support from global institutions like IOSCO and appropriate funding would be critical to success. Under the structure the IFAC envisions, the IASB would remain focused on financial reporting standards and coordinate with the ISSB to avoid overlaps and gaps.

The ISSB itself would adopt a “building blocks” approach, working with and leveraging the expertise and disclosure requirements of leading initiatives, including CDP, CDSB, GRI, IIRC, and SASB. These building blocks would consist of:

• Requirements for material non-financial information focused on company performance, risk profile, economic decisions and enterprise value creation.
• Collaboration with respect to reporting requirements designed to address broader, material sustainable development and company impacts on economy, environment, and people. These requirements may ultimately be incorporated or endorsed into ISSB standards.
• Supplemental jurisdictional requirements to support local public accountability.

Financial and non-financial information would be connected through a common conceptual framework.

The IFAC notes that the time for a global solution is now — to answer the demand from investors, policymakers and other stakeholders for a reporting system that delivers consistent, comparable, reliable, and assurable information relevant to enterprise value creation, sustainable development and evolving expectations. A fragmented approach would perpetuate inefficiency, increased cost, and a lack of trust. Therefore, the IFAC argues, that important work that is currently underway should be continued, but with the aim of ultimately contributing to the emerging global system.

Please click to access Enhancing Corporate Reporting: The Way Forward on the IFAC website.

After an introductory assessment of the current situation, which stresses the growing and urgent demand and the need for consistency in reporting and comparable information, the consultation paper sets out high-level options for the IFRS Foundation. These options are explained as maintaining the status quo, facilitating existing initiatives, or creating a Sustainability Standards Board (SSB) and becoming a standard-setter working with existing initiatives and building upon their work.

For establishing the possible new sustainability standards board the existing IFRS Foundation’s three-tier governance structure could be leveraged. The new board could operate alongside the International Accounting Standards Board (IASB) under the existing governance structure, build on existing developments and collaborate with other bodies and initiatives in sustainability, focusing initially on climate-related matters. However, the consultation paper sets out critical success factors for the creation of an SSB. These include:

• Achieving sufficient support from public authorities and market participants;
• working with regional initiatives to achieve global consistency and reduce complexity in the reporting landscape;
• achieving the appropriate level of funding; and
• ensuring the current mission of the IFRS Foundation is not compromised.

If respondents believe that the SSB could and should be established by the IFRS Foundation, the discussion paper suggests a ‘climate-first’ approach, proposes that the SSB would initially focus its efforts on the sustainability information most relevant to investors and other market participants and could consider how to broaden its scope as it proceeds with its work, and and discusses assurance aspects.

The consultation paper includes ten questions to respondents and encourages stakeholders to raise any other comment or relevant matters for the consideration of the Trustees. Comments on the consultation are requested by 31 December 2020.

Please click for the following additional information:

• Press release
• Consultation paper
• Need to know — Ground-breaking proposal from IFRS Foundation points to global standards for sustainability reporting

In addition, the CDP, Climate Disclosure Standards Board, Global Reporting Initiative, International Integrated Reporting Council and Sustainability Accounting Standards Board have issued an open letter to Erik Thedéen, Chair of the Sustainable Finance Task Force of the International Organization of Securities Commissions, on the need to work together to meet the needs of the capital markets.  Mr. Thedéen acknowledged the letter and the IFRS Foundation consultation in a speech stating that: "While these initiatives are currently running in parallel, I expect them to come together."

IFAC has issued a press release, applauding both, the IFRS Foundation consultation and the open letter.

New Matter

IFRS 10 Consolidated Financial Statements and IFRS 16 Leases — Sale and Leaseback in a Corporate Wrapper: The Committee decided not to add the matter to its agenda but to publish a tentative agenda decision to analyse the application of both IFRS 10 and IFRS 16 to the transaction in which an entity sells its equity interest in a subsidiary that holds only a real estate asset and then leases that real estate asset back. Most of the Committee members agreed with the conclusion but expressed their concerns on various aspect of the analysis and suggested amendments in wordings to the agenda decision.

Interpretations Committee Advice

IAS 12 Income Taxes — Deferred Tax arising from a Single Transaction: Most of the Committee members agreed with the preliminary proposed recommendations by the Committee to the Board's Exposure Draft ED/2019/5 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12). Some gave opinions on certain areas for the staff's consideration for further recommendation or clarification.  

More In­for­ma­tion

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

The publication explores where and how an organisation should show the impacts of the pandemic and the uncertainties that lie ahead in its integrated report.

Please click to access FAQ – Reporting in a time of crisis on the IRC website.

The IRC also offers a dedicated website with publications, resources and examples of COVID-19 reporting in integrated reports.

Central to the letter is that materiality of disclosures should be assessed according to investor concerns.  The letter states:

"We therefore confirm the investor view that climate-related risks are material factors that should be reflected appropriately in financial statements"

The letter concludes by asking:

• "That companies apply the IASB opinion in the letter and the spirit, including showing the key assumptions that have been made with regard to climate-related risks.
• That auditors only sign off financial statements which are consistent with the IASB opinion in the letter and the spirit, which include showing the key assumptions that have been made with regard to climate-related risks.
• That regulators and civil society work with us in enforcing and encouraging these actions.
• That henceforward the assumptions made by companies in preparing financial statements under International Financial Reporting Standards be compatible with the Paris Agreement".

The full letter is available on the Principles for Responsible Investment (PRI) website.  Our news item on IFRS Standards and climate-related disclosures is available here.