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.

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.

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.

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 scope of the project will include:

• exploring whether and how companies’ risk identification, risk management and scenario planning processes are evolving and how this is impacting reporting and disclosure.
• determining whether the time horizons utilised in scenario planning have changed.
• considering how companies communicate uncertainty in their disclosures.
• discussing which areas of reporting are most challenging for companies.
• exploring examples of risks and related disclosures where investor focus has been heightened by the current pandemic (for example, supply chain risk, existential risk/viability of business model).
• analysing how investors use this information in their decision-making process and identify whether reporting meets investor needs;
• discussing what types of disclosures would be most useful in interim reports; and
• highlighting best practice in current company reporting.

A press release and further information are available on the FRC website.

The purpose is to collect input on the proposals in the IASB's discussion paper DP/2020/1 Business Combinations — Disclosures, Goodwill and Impairment and on EFRAG’s suggestions included in its draft comment letter.

Responses on the survey are requested by 26 October 2020. Please click for more information and access to the survey on the EFRAG website.

Please note that the deadline for responses has been extended to 13 November 2020.

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.

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.

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.

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.