September

Pre-meeting summaries for the September 2020 IFRS Interpretations Committee meeting

10 Sep, 2020

The IFRS Interpretations Committee will meet via video conference on Tuesday 15 September 2020 to discuss two topics.

IFRS 10 Consolidated Financial Statements and IFRS 16 Leases—Sale and Leaseback in a Corporate Wrapper: The Committee received a submission asking about the applicability of the sale and leaseback requirements in IFRS 16 to a 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. The submitter asked as to how the gain or loss on disposal should be recognised. The staff concluded that the principles and requirements in IFRS 10 and IFRS 16 provide an adequate basis to determine that the transaction is a sale and leaseback and that the requirements in IFRS 16 apply. On that basis the staff recommend that the Committee not add the matter to its agenda.

IAS 12 Income Taxes—Deferred Tax arising from a Single Transaction: In July 2019, the Board published Exposure Draft ED/2019/5 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).The staff analysed the respondents' feedback to the ED and will present the preliminary proposed recommendations to the Committee for advice.

Work in progress: The staff are analysing requests related to the hedge of variability in cash flows in real terms and configuration or customisation costs in a cloud computing arrangement.

The full 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 for the meeting as they become available.

Pre-meeting summaries for the September 2020 IASB meeting

17 Sep, 2020

The IASB will meet via video conference on 22 and 23 September 2020 for its regular meeting. We have posted our pre-meeting summaries for the meetings 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.

Maintenance and Consistent Application — Lease Liability in a Sale and Leaseback — Sweep Issue: The staff are drafting the exposure draft (ED) to amend IFRS 16. They have identified matters that the Board needs to consider. They recommend that the ED specify that when measuring the ROU asset and lease liability arising from a sale and leaseback, a seller-lessee determines the proportion of the asset sold that relates to the right of use it retains by comparing the present value of the expected payments for the lease to the fair value of the asset sold.  They also recommend that the Board modify its tentative proposed approach for how a seller-lessee subsequently measures the lease liability arising from the leaseback such that the seller-lessee would reduce the carrying amount of the lease liability to reflect expected payments for the lease at market rates.

Business Combinations under Common Control: The BCUCC Discussion Paper is expected to be published in November 2020. The staff recommend a comment period of 120 days.

Management Commentary: The staff recommend that the proposed revised practice statement remain a non-binding framework for the preparation of management commentary; require management commentary to include an unqualified statement of compliance with the Practice Statement if it complies with all the requirements in the Practice Statement or explain which requirements it does not comply with if it does not comply; retain the requirement that when management commentary relates to financial statements, an entity should either make the financial statements available with the management commentary or identify in the management commentary the financial statements to which it relates; and require an entity to specify the date when its management commentary is authorised for issue and to reflect any material information about events occurring after the end of the reporting period and before the date when the management commentary was authorised for issue.

Extractive activities: The staff papers summarise the results of outreach to determine what problems, if any, entities with extractive activities have applying IFRS Standards and whether the primary users of financial statements of entities with extractive activities are obtaining all the information they need for these entities.

Rate-regulated Activities: The staff are drafting the ED on regulatory assets and liabilities. They have identified matters that the Board needs to consider, including the definition of a regulatory asset and regulatory liability, regulatory returns on assets not yet available for use. Additionally, the staff recommend extending the comment period to 180 days.

Board work plan update: The staff will give the Board an oral update on the work plan.

More in­for­ma­tion

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

Recordings of the fourth round of IASB webinars on the exposure draft on general presentation and disclosures

11 Sep, 2020

In August 2020, the IASB offered English, Japanese and Korean language webinars summarising the Board’s detailed proposals for management performance measures.

The IASB has made available recordings of the live webinars in all three languages. The recordings can be accessed through the press release on the IASB's website.

September 2020 IASB meeting notes posted

29 Sep, 2020

The IASB met on Tuesday 22 and Wednesday 23 September 2020 via video conference. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

Maintenance and Consistent Application — Lease Liability in a Sale and Leaseback — Sweep Issue: The staff are drafting the exposure draft (ED) to amend IFRS 16. They identified matters that the Board needed to consider. The Board decided that the ED specify that when measuring the ROU asset and lease liability arising from a sale and leaseback, a seller-lessee determines the proportion of the asset sold that relates to the right of use it retains by comparing the present value of the expected payments for the lease to the fair value of the asset sold.  It also decided to modify its tentative proposed approach for how a seller-lessee subsequently measures the lease liability arising from the leaseback such that the seller-lessee would reduce the carrying amount of the lease liability to reflect expected payments for the lease at market rates. The ED is expected to be published in November 2020.

Business Combinations under Common Control: The BCUCC Discussion Paper is expected to be published in November 2020. The Board decided to have a comment period of 180 days.

Management Commentary: The Board decided that the proposed revised practice statement remain a non-binding framework for the preparation of management commentary; require management commentary to include an unqualified statement of compliance with the Practice Statement if it complies with all the requirements in the Practice Statement; retain the requirement that when management commentary relates to financial statements, an entity should either make the financial statements available with the management commentary or identify in the management commentary the financial statements to which it relates; and require an entity to specify the date when its management commentary is authorised for issue and to reflect any material information about events occurring after the end of the reporting period and before the date when the management commentary was authorised for issue.

Extractive activities: The staff papers summarise the results of outreach to determine what problems, if any, entities with extractive activities have applying IFRS Standards and whether the primary users of financial statements of entities with extractive activities are obtaining all the information they need for these entities. The Board asked the staff to examine further differences identified between jurisdictions of reserve and resource disclosure requirements.

Rate-regulated Activities: The staff are drafting the ED on regulatory assets and liabilities. They identified matters that the Board needed to consider. The Board decided to change the definitions of a regulatory asset and regulatory liability and to clarify the measurement of regulatory returns on assets not yet available for use.  The Board also decided to have a comment period of 150 days. The ED is expected to be published in January 2021.

Board work plan update: The staff gave the Board an oral update on the work plan. The staff intend to bring more formal work plan updates every 3 to 4 months.

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

September 2020 IASB meeting agenda posted

11 Sep, 2020

The IASB has posted the agenda for its next meeting, which will be held via video conference on 22–23 September 2020. There are six topics on the agenda.

The Board will discuss the following:

  • Board work plan update
  • Maintenance and consistent application
  • Rate-regulated activities
  • Management commentary
  • Business combinations under common control
  • Extractive activities

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.

September 2020 IFRS Interpretations Committee meeting agenda posted

04 Sep, 2020

The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held by video conference on 15 September 2020.

The Committee will discuss the following:

  • Administrative matters
  • IFRS 10 and IFRS 16 — Sale and leaseback in a corporate wrapper
  • IAS 12 — Deferred tax related to assets and liabilities arising from a single transaction
  • Work in progress

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.

Standard setters discuss intangibles at IFASS meeting

30 Sep, 2020

The International Forum of Accounting Standard Setters (IFASS) is currently holding its fall meting as a virtual conference. One presentation today saw a contribution by the standard setters of Canada, Germany, Japan, the United Kingdom and the United States on perspectives on the financial reporting on intangibles.

The five standard setters found that even among their group of five there were different perspectives on the accounting for intangibles - some seeing the difference between book value and market value of a company as a problem, some seeing the difference between book value and market value as a problem that can be solved by disclosures, some seeing no problem in the difference between book value and market value. The purpose of the presentation was to provide a balanced discussion of the alternative perspectives to support community-wide consideration of the issues and stimulate relevant academic research.

FASB Board member Christine Botosan presented the view of those that believe there is a problem, which needs resolving by additional recognition of intangibles. Her arguments included:

  • Failure to recognise important intangible items understates book value of equity and financial performance;
  • failure to recognise important intangible items reduces the relevance of financial statements;
  • recognition of some amount is better than no recognition:
    • Measurement challenges should not preclude recognition; and
    • verifiability concerns should not preclude recognition.

Ms Botosan also commented on measurement bases and their application to intangible assets. She differentiated between "in-exchange" assets that are used on a standalone basis and readily convertible to cash and "in-use" assets that are used in combination and not readily convertible to cash. Ms Botosan noted that most intangible items are "in-use" an that the relevant measurement basis should be historical cost or replacement cost. However, these costs are difficult to determine. Similarly, determining the fair value of intangible assets is difficult as intangible assets tend to be unique.

Kelly Khalilieh, Director of Accounting Standards at AcSB Canada, presented the view of those that believe there is no problem or not a problem that cannot be solved by additional disclosures. She noted that research shows that financial information is not declining in relevance and that it is not the objective of financial statements to show the market value of a company. Ms Khalilieh explored the benefits  of mandatory and voluntary disclosures. She noted that mandatory disclosures could be subject to audit and would be comparable and consistent. Voluntary disclosures would provide greater flexibility and would allow for more tailored disclosures. On possible disclosures she noted the following:

  • Disaggregated information on expenditures of intellectual capital (“future-orientated intangibles”),
  • an additional classification for “intangible activities” in the cash flow statement;
  • a statement of intangible assets or intellectual capital flows; and
  • an explanation in the notes of expenditures on intangible items.

Outside of financial statements she suggested to link intangible activities to the discussion of the organisational strategy and objectives and to supplement it with human capital metrics.

The paper of the five standard setters is currently under review at an academic accounting journal.

Summary report of a field-test workshop with financial institutions on the IASB's PFS proposals

09 Sep, 2020

EFRAG, in close coordination with the European national standard-setters and the IASB, is conducting field-tests of the IASB proposals included in the Exposure Draft ED/2019/7 'General Presentation and Disclosures' published in December 2019. A report is now available from a field-test workshop held held with financial institutions on 7 July 2020.

Participants of the field-test were asked to apply the IASB's proposals to their financial statements and answer a questionnaire from EFRAG and the IASB. The results were then discussed in the workshop.

Please click for additional information and the report from the workshop on the EFRAG website.

Results from a similar workshop with corporates were released in August 2020.

Summary report on EFRAG's preparers roundtable

25 Sep, 2020

In the workshop on the IASB Exposure Draft 'General Presentation and Disclosures', which was undertaken jointly with Business Europe and the IASB on 1 September 2020, different preparers​ discussed potential implementation and application concerns and the possible need for additional guidance.

The summary report​ on the EFRAG website has been prepared for the convenience of European constituents to summarise the input from the workshop and will be further considered by the involved organisations in the respective due process on the IASB proposals.

Towards comprehensive corporate reporting

11 Sep, 2020

Five internationally significant framework- and standard-setting institutions (CDP, CDSB, GRI, IIRC, and SASB) have published a statement of intent to work together towards a comprehensive corporate reporting system.

While GRI, SASB, CDP and CDSB set the frameworks and standards for sustainability disclosure, including climate-related reporting, along with the TCFD recommendations, the IIRC provides the integrated reporting framework that connects sustainability disclosure to reporting on financial and other capitals.

These organisations have now declared their intent to provide:

  • joint market guidance on how the frameworks and standards can be applied in a complementary and additive way;
  • a joint vision of how these elements could complement financial generally accepted accounting principles (financial GAAP) and serve as a natural starting point for progress towards a more coherent, comprehensive corporate reporting system; and
  • joint commitment to drive toward this goal, through an ongoing programme of deeper collaboration between them, and a stated willingness to engage closely with other interested stakeholders.

The “big picture” view of the relationship between the standards and frameworks, including their relationship to the IASB and FASB standards, foresees an approach to standard-setting that results in a globally agreed set of sustainability topics and related disclosure requirements under a rigorous and ongoing standard-setting due processes that will result in high-quality global standards.

The comprehensive corporate reporting system the paper envisions would then see three nested sets of reporting:

  • Reporting on matters that reflect the organisation’s significant impacts on the economy, environment and people;
  • reporting on the sub-set of sustainability topics that are material for enterprise value creation; and
  • reporting that is already reflected in the financial accounts.

Reporting already reflected in the annual accounts would continue to be the remit of IASB and FASB and the subset of sustainability topics that are material for enterprise value creation would be covered by CDSB and SASB. Both sets would be connected by an overarching integrated reporting framework. GRI Standards would enable companies to report sustainability information that describes their significant impacts on the economy, environment, or people, and hence their contributions towards sustainable development and could also be used to describe impacts on the company. CDP would fill the crucial role of technology in reporting and enable access for all stakeholders to corporate performance on sustainability topics. The standards rsulting from this comprehensive reporting system would enable companies to collect information about performance on a given sustainability topic once but provide relevant information to different users through appropriate communication channels.

Please click to access the joint press release and statement of intent (external link).

In addition, see Deloitte's Purpose-driven Business Reporting in Focus — Progress towards a comprehensive corporate reporting system.

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