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FCA issues consultation paper proposing improvements to climate-related disclosures for listed companies

09 Mar 2020

The Financial Conduct Authority (FCA) has published a consultation paper (CP20/3) which proposes to enhance climate-related disclosures by companies with a UK premium listing and clarify existing disclosure obligations.

The consultation paper, which follows on from the FCA's related Discussion Paper and Feedback Statement issued last year, proposes to introduce a new continuing obligation in the Listing Rules (LR) referencing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) on a 'comply or explain' basis. In particular, LR 9.8 (the new climate-related disclosure rule) would require premium-listed companies to include a statement in the annual report setting out:

  • whether they have made disclosures consistent with the TCFD's recommendations and recommended disclosures in their annual financial report;
  • an explanation of 'why' where they have:
    • not made disclosures consistent with some or all of the TCFD's recommendations and/or recommended disclosures; or
    • included some or all of the disclosures in a document other than their annual report; and 
  • where in their annual report (or other relevant document) the various disclosures can be found.

The FCA is also seeking feedback on guidance it proposes to issue, via a Technical Note, on existing obligations set out in EU legislation and in its Handbook, that may already require issuers to disclose information on climate-related (and other environmental, social and governance matters) in certain circumstances.  The guidance will be relevant for a wider scope of entities, incluing all companies with listed securities, not just those in the premium segment.  The proposed Technical Note is included in draft as an appendix to the Consultation Paper. 

The new rule is proposed to take effect for accounting periods beginning on or after 1 January 2021.  This will mean that the first reports issued in compliance with the new rule would be published in 2022. Responses to the Consultation Paper are requested by 5 June 2020. 

The press release and Consultation Paper are available on the FCA website. 

IFRS Interpretations Committee holds March 2020 meeting

09 Mar 2020

The IFRS Interpretations Committee met on 3 March 2020. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

Item for Continuing Discussion

IFRS 16 Leases—Sale and leaseback with variable payments (Agenda Paper 2): The Committed concluded that the accounting of a sale and leaseback transaction at the date of transaction is clear. However, it recommended standard-setting to clarify the subsequent measurement of the seller-lessee's liability arising from such sale and leaseback with variable payments.

New Issue

IAS 12 Income Taxes—Deferred tax related to a subsidiary's undistributed profits (Agenda Paper 3): The Committee concluded that a reporting entity should recognise deferred tax for the temporary differences arising from undistributed profits of a subsidiary and will publish a tentative agenda decision with amendments suggested in the meeting and explaining why neither an interpretation of, nor an amendment to, IAS 12 is necessary.

Agenda Decisions to Finalise

IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 29 Financial Reporting in Hyperinflationary Economies—Translation of a hyperinflationary foreign operation (Agenda Paper 4): The Committee decided, unanimously, to finalise the agenda decision with amendments to wording.

IFRS 15 Revenue from Contracts with Customers—Training costs to fulfil a contract (Agenda Paper 5): The Committee decided, by a majority vote, to finalise all three agenda decisions, with some amended wording.

More information

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

EFRAG publishes February 2020 issue of 'EFRAG Update'

06 Mar 2020

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during February 2020.

The update reports on the EFRAG Board meeting on 18 February, the EFRAG Technical Expert Group conference call on 5 February and the Project Task Force on Climate-Related Reporting meeting on 7 February.

The update also lists EFRAG publications issued in February: 

Please click to download the February EFRAG update from the EFRAG website. 

IASB to complete its planned redeliberations of the proposed IFRS 17 amendments

06 Mar 2020

At its upcoming March meeting, the IASB will discuss the remaining issues resulting from the feedback received on the exposure draft ED/2019/4 'Amendments to IFRS 17' which are the effective date of IFRS 17 and the expiry date of the IFRS 9 temporary exemption in IFRS 4.

On the effective date, which originally was set at 1 January 2021 and which ED/2019/4 proposed to move to 1 January 2022, the staff now recommend that the Board:

  • a) defer the effective date of IFRS 17 (incorporating the amendments) to annual reporting periods beginning on or after 1 January 2023; and
  • b) extend the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after 1 January 2023.

The staff recommend that the amendment to IFRS 4 — reflecting the extension of the fixed expiry date for the temporary exemption from applying IFRS 9 — is balloted separately from the amendments to IFRS 17 (including consequential amendments to other IFRSs). This will give jurisdictions with an endorsement process the possibility to endorse the temporary exemption independently (and possibly more quickly) and so avoid endorsement after the current temporary exemption has run out (January 2021).

The papers for the meeting also offer an overview of all topics discussed and the Board's tentative decisions (links are to our Deloitte meeting notes taken at the meeting the decision was made).

Topic Confirm amendment as proposed in the ED Confirm proposed amendment with some changes Amendment not proposed in the ED
1A — Scope exclusion for credit cards January 2020
1B — Scope exclusion for loans December 2019
2 — Expected recovery of insurance acquisition cash flows December 2019, January 2020
3 — Contractual service margin attributable to investment services December 2019, February 2020
4 — Reinsurance contracts held — recovery of losses December 2019
5 — Presentation in the statement of financial position December 2019
6A — Applicability of the risk mitigation option — reinsurance contracts held December 2019
6B — Applicability of the risk mitigation option — non-derivative financial instruments at fair value through profit or loss February 2020
7 — Accounting policy choice relating to interim financial statements January 2020
8A — Effective date of IFRS 17 To be decided at March 2020 meeting
8B — Expiry date of IFRS 9 temporary exemption in IFRS 4 To be decided at March 2020 meeting
9A — Transition relief for contracts acquired December 2019
9B — Transition reliefs for the risk mitigation option — the application from the transition date December 2019
9C — Transition relief for risk mitigation option — the option to apply the fair value approach December 2019
9D — Transition relief for investment contracts with discretionary participation features February 2020
9E — Transition relief for identifying the date a reinsurance contract held was acquired February 2020
9F — Transition relief relating to interim financial statements February 2020
10 — Minor amendments February 2020

After its March 2020 meeting, the Board will have completed its planned redeliberations of the feedback on the exposure draft. If the Board gives permission to start the balloting process at this meeting, the staff plan to draft the amendments to IFRS 17 and bring any sweep issues identified during the balloting of the amendments for discussion at a future meeting. The staff expect that the amendments will be issued in the second quarter of 2020, in line with the Board’s plan as stated in the exposure draft.

Please click to access all papers for the meeting on the IASB website. The discussion of the IFRS 17 amendments is currently scheduled for Tuesday 17 March 14.30-15.30 London time.

March 2020 IASB meeting agenda posted

06 Mar 2020

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 17 and 19 March 2020. There are nine topics on the agenda.

The Board will discuss the following:

  • Maintenance and consistent application
  • Agenda consultation
  • Amendments to IFRS 17 Insurance Contracts
  • Disclosure initiative — Subsidiaries that are SMEs
  • Rate-regulated activities
  • Management commentary
  • Disclosure initiative — Targeted Standards-level review of disclosures
  • Financial instruments with characteristics of equity
  • Post-implementation review of IFRS 10–12

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.

EFRAG to conduct field-testing on IASB’s project on primary financial statements

06 Mar 2020

The EFRAG, in coordination with European National Standard Setters and the IASB, will conduct field-testing on the IASB’s Exposure Draft ED/2019/7, ‘General Presentation and Disclosures’, and invites companies to participate in the field-testing.

The field-testing will help ‘identify potential implementation and application concerns, to determine whether there is a need for additional guidance, and to estimate the effort required to implement and apply the proposals’. The deadline to participate in the field-testing is 3 April 2020.

For more information, see the press release on the EFRAG’s website.

IFRS Foundation issues Coronavirus update

04 Mar 2020

The IFRS Foundation has provided an operational update related to the Coronavirus. At this time, the IFRS Foundation expects to continue its current plan of scheduled public meetings and events, except for the March IFRS Advisory Council meeting which has been postponed. In addition, the April ASAF meeting will only meet via remote digital participation.

Public meetings will continue to provide a remote digital option for those who cannot attend in person. Any changes to the schedule will be flagged on the IASB’s meeting calendar.

For more information, see the press release on the IASB’s website.

IASB issues podcast on latest Board developments (February 2020)

03 Mar 2020

The IASB has released a podcast, featuring IASB Chair Hans Hoogervorst and Vice-Chair Sue Lloyd as well as Mark Byatt from the IFRS Foundation, to discuss the deliberations at the February IASB meeting.

The podcast features dis­cus­sions related to:

  • Disclosure initiative;
  • Business combinations under common control;
  • IBOR (phase 2);
  • Amendments to IFRS 17.

The podcast can be accessed through the press release on the IASB website. More in­for­ma­tion on the topics discussed is available through our com­pre­hen­sive notes taken by Deloitte observers at the February IASB meeting.

February 2020 IASB meeting notes posted

02 Mar 2020

The IASB met on 25–27 February 2020 to discuss six topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

Amendments to IFRS 17 Insurance Contracts The Board continued its discussion of topics and decided:

  • Contractual service margin attributable to investment services (to finalise the amendments proposed, with some changes)
  • Level of aggregation—annual cohorts for insurance contracts with intergenerational sharing of risks between policyholders (to retain the requirement in IFRS 17).
  • Applicability of the risk mitigation option—non-derivative financial instruments at fair value through profit or loss (that the risk mitigation option be extended for insurance contracts with direct participation features in IFRS 17:B115)
  • Minor editorial and consequential amendments (to finalise them with minor changes).
  • Additional specific transition modifications and reliefs (to extend, amend and add modifications to the modified retrospective approach).
  • For other topics raised by respondents to the Exposure Draft Amendments to IFRS 17 the Board decided to amend the proposal only to resolve an inconsistency between that paragraphs and IFRS 17:B65(m) and IFRS 17:B66(f) and not for any of the other matters raised.

IBOR Reform and the Effects on Financial Reporting The Board completed its discussions of proposed amendments that respond to IBOR reform and decided to:

  • Limit the scope of the amendment and clarify that a change in the basis on which the contractual cash flows are determined that alters what was originally anticipated constitutes a modification of a financial instrument in accordance with IFRS 9;
  • Propose temporary relief for hedging relationships that are amended to reflect modifications directly required by the reform;
  • Set out how the amendments are applied when transition to an alternative benchmark rate occurs for classification and measurement of financial instruments; hedge accounting; lease accounting; and disclosures. The separately identifiable requirement for risk components will cease applying 24 (rather than 12) months after the date that the alternative benchmark rate was designated as a risk component for hedge accounting purposes. These amendments should be mandatory and not voluntary.
  • Have an effective date of annual periods beginning on or after 1 January 2021 with earlier application permitted, and be applied retrospectively.

The ED is expected to be published in April, with a comment period of 45 days.

Disclosure Initiative—Targeted Standards-Level Review of Disclosures The Board continued its discussions of potential revisions to the disclosure requirements in IFRS 13 and decided that the disclosure requirements in IFRS 13 be amended to:

  • refer to significant drivers of change in the objective;
  • require an entity to disclose a reconciliation from opening to closing balances of recurring fair value measurements categorised within Level 3 of the fair value hierarchy;
  • state that an explanation by an entity of significant drivers of change in fair value measurements other than those classified in Level 3 of the fair value hierarchy might be necessary for it to meet the disclosure objective.

Disclosure Initiative—Accounting Policies The staff presented a summary of the feedback received on the proposal to amend IAS 1 (or its proposed replacement, see  to require the disclosure of ‘material’ rather than ‘significant’ accounting policies and to add guidance on how to assess whether an accounting policy is material. No decisions were made.

Business Combinations under Common Control The Board approved all of the disclosure requirements recommended by the staff to accompany the acquisition and predecessor approaches for a BCUCC. The Board will publish the proposals in a DP, which the staff will prepare.

The staff gave an update on recent activities of the IFRS Interpretations Committee.

The Board decided not to finalise the proposed amendments to IFRIC 14 related to Availability of a Refund.

The Board will consider as part of the 2020 Agenda Consultation whether to include the subject as a potential project.

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

IASB releases podcast on IFRS 17

02 Mar 2020

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

The seven minute podcast can be accessed through the press release on the IASB website. Our summary of the meeting and the results of the IASB's votes is available here.

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