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.

November

Accountancy Europe response to ad personam mandate on non-financial reporting standard setting

19 Nov 2020

Accountancy Europe has responded to the request of the President of the EFRAG Board to share views on the future governance and framework of EFRAG in the context of possible changes to non-financial reporting by companies.

Accountancy Europe especially raises points around the governance, structure and financing of the European Financial Reporting Advisory Group (EFRAG) that need to be considered if a standard-setter for non-financial information were to be established under the umbrella of EFRAG.

As before in its paper on interconnected standard-setting for corporate reporting, Accountancy Europe points out that standard-setting needs to follow the principles of legitimacy, independence, transparency, public accountability, due process, and balance and notes that:

Particularly, a multi-stakeholder involvement guarantees high quality and balanced standards; whereas independence affects the public perception of standard setting and resultantly, legitimacy.

Applying these principles to a possible standard-setter for non-financial information (NFI), the comment letter makes the following suggestions:

  • setting up a new body within EFRAG to address NFI standards activities;
  • providing adequate governance and oversight to the NFI standards activities body (distinct from the governance and oversight of the financial reporting activities);
  • ensuring connectivity between NFI and financial activities within the EFRAG where appropriate;
  • providing adequate governance and oversight of the EFRAG organisation as a whole;
  • enlarging the EFRAG General Assembly;
  • setting up a new NFI EFRAG Advisory Council; and
  • reforming the EFRAG European Reporting Lab.

The comment letter also emphasises the other on-going initiatives in the field and especially notes the work of CDP-CDSB-GRI-IIRC-SASB as well as the IFRS Foundation consultation towards a comprehensive reporting system. Accountancy Europe proposes that EFRAG uses the NFI standards from these initiatives as a basis upon which to add regional (EU) requirements and only develops separate standards if it becomes clear that a global solution will not be timely available as broad market acceptance also depends on leveraging to the maximum possible the relevant work of recognised NFI frameworks and standards organisations.

On financing, the comment letter makes clear that that the more demands are put on EFRAG, the more human and financial resources will be needed. To this end, stable funding from both the private sector (financially and, in particular, in kind) and from the European Commission is required, both for the EFRAG ac­tiv­i­ties related to financial reporting and the ones related to the wider corporate reporting including NFI reporting.

Please click to access the full comment letter on the website of Accountancy Europe.

Agenda for the December 2020 ASAF meeting

11 Nov 2020

The International Accounting Standards Board (IASB) has released an agenda and meeting papers for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held by remote participation on 10 December 2020.

The agenda for the meeting is summarised below:

Thursday, 10 December (11:00-15:00)

  • Rate-regulated activities
    • Main features of the proposals in the forthcoming exposure draft and ASAF members' views on possible outreach activities
  • Cryptoassets
    • EFRAG discussion paper on the accounting for cryptoassets
  • Financial instruments with characteristics of equity
    • Potential refinements to the disclosure requirements in the June 2018 discussion paper
  • Dynamic risk management (oral update on the project)
  • Lack of exchangeability (Amendments to IAS 21)
    • Introduction of the forthcoming exposure draft

For more information, please see the agenda and meeting papers on the IASB's website.

Agenda for the upcoming Emerging Economies Group meeting

26 Nov 2020

The IASB Emerging Economies Group (EEG) will meet via video conference on 30 November and 1 December 2020. An agenda for the meeting is now available.

The agenda for the meeting is summarised below:

Monday 30 November 2020 (11:00-15:45)

  • Welcome
  • Disclosure initiative — Accounting policies
    • Overview of the forthcoming amendments
  • Disclosure initiative — Subsidiaries that are SMEs
    • Update on the project
  • Disclosure initiative – Targeted standards-level review of disclosures
    • Overview of forthcoming proposals
  • Applying IFRSs in 2020
    • Discussion on the impact of Covid-19
  • Lack of exchangeability
    • Overview of forthcoming proposals

Tuesday 1 December 2020 (11:00-15:30)

  • Goodwill and impairment
    • Feedback from the EEG members on the discussion paper
  • Update on IASB projects
  • Post-implementation review of IFRS 10-12
    • Overview of the forthcoming request for information

    Agenda papers from this meeting are available on the IASB's website.

    Chairman of the IFRS Foundation Trustees presents sustainability consultation paper at ISAR 37, engages in panel discussion

    06 Nov 2020

    At the thirty-seventh session of the United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) this week, Erkki Liikanen, Chairman of the IFRS Foundation Trustees, introduced the Trustees' consultation paper that was published in September to assess demand for global sustainability standards and what role the Foundation might play in the development of such standards.

    During the introduction of the consultation paper Mr Liikanen noted that when the challenges are global, the most optimal solution would be global. He explained that there have calls for the IFRS Foundation to play a role in this area as the Foundation has a well-established model of global standard-setting, working in close cooperation with both public and private stakeholders.

    The presentation was followed by a lively panel discussion on "Climate-related financial disclosures in mainstream entity reporting: Good practices and key challenges", that among other speakers saw participation of representatives of TCFD, CDSB, CDP, and UNEP FI.

    Please click for the following additional information:

    December 2020 IFRS Interpretations Committee meeting agenda posted

    20 Nov 2020

    The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held by video conference on 1-2 December 2020.

    The Committee will discuss the following:

    • Administrative matters
    • IAS 1 — Classification of debt with covenants as current or non-current
    • IAS 19 — Attributing benefit to periods of service
    • Supply chain financing arrangements — reverse factoring
    • IAS 38 — Configuration or customisation costs in a cloud computing arrangement
    • IFRS 9 — Hedging variability in cash flows due to real interest rates
    • 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.

    Deloitte response to ad personam mandate on non-financial reporting standard setting

    10 Nov 2020

    The Deloitte firms in the European Union have responded to the request of the President of the EFRAG Board to share views on the future governance and framework of EFRAG in the context of possible changes to non-financial reporting by companies.

    As general background, we welcome the European Commission’s review of the non-financial reporting directive and support companies disclosing high-quality, transparent, relevant and comparable non-financial information that is connected to financial information within mainstream corporate reporting. We support global standards for reporting these because issues such as climate change are global, and the UN Sustainable Development Goals are of course global. However, we recommend a ‘building block approach’ where core global standards can be supplemented by local requirements.

    We recognise the urgency of developing harmonised standards for non-financial reporting, and the particular needs of the EU, given that the EU has adopted reporting requirements that will apply in the relatively near term, particularly for financial sector companies. We are encouraged by recent international developments, including the statement of intent of five leading sustainability and integrated reporting organisations to work together in this area and by the IFRS Foundation’s consultation paper on sustainability reporting.

    We agree that EFRAG has an essential role to play with respect to non-financial reporting requirements in the EU. What that role would be will depend on the overall approach agreed by the EU Institutions as well as the outcome of current developments in non-financial information standard-setting at the global level. We can see at least two possible roles and approaches for EFRAG:

    • an influencer and endorsement adviser with respect to global sustainability standards; or
    • standard-setting activities for the EU for non-financial reporting standards.

    The expected role of EFRAG in non-financial reporting standard-setting will depend on a proper understanding of what needs to be developed at a European level versus what could be leveraged from global existing and future developments, and related timing. This would have significant implications on the possible changes to EFRAG’s governance and resourcing.

    Please click to download our full analysis in the comment letter.

    Educational material on applying IFRSs to climate-related matters

    20 Nov 2020

    The IFRS Foundation has released a publication that shows how existing IFRS requirements require companies to consider climate-related matters when their effect is material to the financial statements.

    The publication mainly consists of a non-exhaustive list of examples illustrating when IFRS Standards may require companies to consider the effects of climate-related matters in applying the principles in a number of standards.

    The examples in the list refer to the following standards:

    • IAS 1 Presentation of Financial Statements
    • IAS 2 Inventories
    • IAS 12 Income Taxes
    • IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets
    • IAS 36 Impairment of Assets
    • IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IFRIC 21 Levies
    • IFRS 7 Financial Instruments: Disclosures
    • IFRS 9 Financial Instruments
    • IFRS 13 Fair Value Measurement
    • IFRS 17 Insurance Contracts

    The publication also notes that in addition to the specific requirements outlined in the table, IAS 1 contains some overarching requirements that could be relevant when considering climate-related matters.

    In an article published in November 2019, IASB Board member Nick Anderson had already explained how IFRS requirements can be used to report on climate and other emerging risks.

    Please click to access Effects of climate-related matters on financial statements on the IASB website.

    EFRAG early-stage analysis of rate regulation proposals — preparer perspective

    11 Nov 2020

    The European Financial Reporting Advisory Group (EFRAG) is inviting preparers to participate in an early-stage analysis of the likely impacts of possible changes to IFRS requirements as a result of the IASB project on the accounting for regulatory assets and regulatory liabilities. The IASB is expected to issue an exposure draft in early 2021.

    The EFRAG analysis aims at assessing possible impacts of the new accounting model under consideration for preparers.

    Please click for more information on the EFRAG website.

    EFRAG issues draft endorsement advice on 'Classification of Liabilities as Current or Non-current ' and 'Deferral of Effective Date (Amendments to IAS 1)'

    20 Nov 2020

    The European Financial Reporting Advisory Group (EFRAG) has issued a draft endorsement advice letter and separate invitations to comment relating to the endorsement for use in the European Union (EU) of 'Classification of Liabilities as Current or Non-current' and 'Deferral of Effective Date (Amendments to IAS 1)' ('the Amendments').

    The objective of the amendments is to clarify one of the criteria in IAS 1 for classifying a liability as non-current - that is the requirement for an entity to have the right to defer settlement of the liability for at least 12 months after the reporting period. 

    EFRAG recommends the endorsement of the Amendments. EFRAG’s initial assessment is that the Amendments meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.

    Comments are required by 07 December 2020.

    For more information, see the press release, draft endorsement advice letter,  and invitations to comment here and here on the EFRAG website. EFRAG has also updated its endorsement status report to the issuance of the positive draft endorsement advice.

    EFRAG publishes its feedback statement on its comment letter to the IASB's exposure draft on Interest Rate Benchmark Reform - Phase 2

    20 Nov 2020

    The European Financial Reporting Advisory Group (EFRAG) has finalised the steps in its due process and published its feedback statement on the draft comment letter to the International Accounting Standard Board's (IASB's) ED/2020/1 'Interest Rate Benchmark Reform - Phase 2: Proposed Amendments to IFRS 9, IAS 39, IFRS 4 and IFRS 16'.

    EFRAG issued its final endorsement advice on 26 October after an accelerated process and has now completed its full due process by issuing and publishing a feedback statement on its comment letter. EFRAG's draft comment letter to the IASB was published on 23 April 2020 and final comment letter was published on 26 May 2020.

    The feedback statement summarises the comments received by EFRAG on its draft comment letter and explains how those comments were considered by EFRAG during its technical discussions leading to the publication of EFRAG's final comment letter.

    A press release and the feedback statement are available on the EFRAG 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.