February

IFRS Interpretations Committee holds February 2021 meeting

05 Feb, 2021

The IFRS Interpretations Committee met via video conference on 2 February 2021. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

The Committee discussed the feedback on one tentative agenda decision and two new issues.

Agenda decision to finalise

IFRS 10 Consolidated Financial Statements and IFRS 16 Leases—Sale and Leaseback of an Asset in a Single-asset Entity: In September 2020, the Committee discussed 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 staff concluded that IFRS 10:25 and B97-B99 apply to the accounting for the loss of control of the subsidiary and IFRS 16:100(a) applies for measuring of the right of use (ROU) asset and the gain on the leaseback arrangement. However, in this meeting, most of the Committee members considered the requirements in IFRS Standards do not provide an adequate basis to support the analysis and conclusion in more complex situations. Therefore, the Committee decided to propose a narrow-scope standard setting project to the Board.

New issues

IAS 2 Inventories—Cost necessary to sell inventories: The Committee members generally agreed that the costs to include as part of the estimated costs necessary to make the sale when determining the net realisable value of inventories should not be limited  to incremental costs but should include other costs necessary to make the sale. Consequently, the Committee decided not to add the matter to the Committee’s standard-setting agenda but publish a tentative agenda decision.

IAS 10 Events after the Reporting Period—Preparation of Financial Statements when an Entity is No Longer a Going Concern: The Committee concluded that the financial statements for all prior periods which had not been issued could not be prepared on a going concern basis if it intends to liquidate the entity subsequently. The Committee did not analyse the issue of restatement of comparative information in respect of the preceding period given the issue is not widespread.

The Committee agreed with the staff’s recommendation not to add the matter to the Committee’s standard-setting agenda as the matter is not widespread and there is no evidence of diversity in practice.

More Information

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

February 2021 IASB supplementary meeting notes posted

05 Feb, 2021

The IASB met via video conference on 4 February 2021 to discuss COVID-19-related rent concessions. We have posted our comprehensive Deloitte observer notes for this topic.

IFRS 16 and COVID-19: The amendments to IFRS 16 the IASB made in relation to rent concessions and COVID-19 provide a practical expedient that applied to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021. The Board decided to publish a proposal to amend IFRS 16 to extend that expedient to 30 June 2022. The Board decided that the amendments should be applied retrospectively. One Board member plans to dissent. The proposals will have a 14-day comment period. The staff think they can publish final amendments by the end of March 2021.

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

Recording of a webinar on the post-implementation review of IFRS 10-12

05 Feb, 2021

On 20 January 2021, the IASB offered a webinar aimed at national standard setters providing an overview of the post-implementation review of IFRS 10-12 launched by the IASB in December 2020.

A recording of the webinar is now available. It can be accessed here on the IASB website.

Recording of the webinar on the discussion paper on business combinations under common control

05 Feb, 2021

On 27 January 2021, the IASB offered a webinar providing an overview of the November 2020 discussion paper DP/2020/2 'Business Combinations under Common Control'. The webinar also explained the Board’s preliminary views and gave the viewers an opportunity to ask questions.

A recording of the webinar is now available. It can be accessed here on the IASB website.

Consultation paper on international financial reporting by non-profit organisations

04 Feb, 2021

International Financial Reporting for Non-Profit Organisations (IFR4NPO), an initiative to develop the first internationally applicable financial reporting guidance for non-profit organisations, has published a consultation paper to give non-profit organisations the opportunity to contribute to the development of the guidance for their sector.

The guidance will apply to the unique sector-specific aspects of the annual general purpose financial reports, considering accounting issues as well as narrative reports that accompany financial statements. It will improve the clarity and consistency of non-profit organisations' financial reports, resulting in greater credibility and trust in the not-for-profit sector globally. The International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board (IPSASB) are aware and actively observing the development process.

The consultation paper has two parts:

  • PART 1: General NPO financial reporting issues
  • PART 2: NPO-specific financial reporting issues

Comments on part 1 are requested by 30 July 2021, on part 2 by 24 September 2021.

Please click for the following additional information on the IFR4NPO website:

IASB will propose to extend practical relief on rent concessions

04 Feb, 2021

In a supplementary meeting held earlier today, the IASB discussed extending the practical relief in IFRS 16, which permits lessees not to assess whether particular rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and, instead, to account for those rent concessions as if they were not lease modifications.

Among other conditions, the 2020 amendments to IFRS 16 permits a lessee to apply the practical expedient only to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021. Stakeholders have pointed out, however, that the ongoing significance and protracted effects of the pandemic were not envisaged at the time the Board developed the practical expedient, as in many jurisdictions the ongoing effects of the pandemic are at least as significant now as they were in May 2020.

The IASB followed this line of argument and decided to propose to extend the relief to reductions in lease payments originally due on or before 30 June 2022 (with one Board member dissenting). The exposure draft to be published will propose retrospective application, which means that a lessee who has applied the initial expedient might possibly be required to reverse lease modification accounting for rent concessions that did not qualify because of the original time limit.

Given the urgency of the matter and with permission of the Trustees, the exposure draft will have a 14-day comment period. Final amendments are expected by the end of March 2021.

IASB posts recordings of recent webinars on academics and the post-implementation reviews of IFRS 9 and IFRS 16

03 Feb, 2021

The IASB has posted the recordings of its recent webinars on identifying research opportunities by academics in IFRS 9 ‘Financial Instruments’ and IFRS 16 ‘Leases’.

The webinars run for approximately 60 minutes and consisted of an overview of the standard’s objectives and related research opportunities, followed by questions and answers.

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

We comment on FRED 77 'Draft amendments to FRS 101 Reduced Disclosure Framework – 2020/21 cycle'

03 Feb, 2021

We have published our comment letter on the Financial Reporting Council's (FRC's) Financial Reporting Exposure Draft (FRED) 77 'Draft amendments to FRS 101 Reduced Disclosure Framework-2020/21 cycle'.

We agree with the proposed amendments and concur with the FRC’s conclusions in the impact assessment. We note, however, that references to EU-adopted IFRS in the Basis for Conclusions will need to be updated in the final version, consistent with recent amendments issued to reflect changes in legislation following the UK’s exit from the European Union.

The full response is contained within the full comment letter.

IFRS Foundation Trustees discuss global sustainability standards and next steps

02 Feb, 2021

At its meeting on 1 February 2021, the IFRS Foundation Trustees discussed feedback received on the first three questions in its consultation paper to assess demand for global sustainability standards and what role the Foundation might play in the development of such standards.

The feedback received indicated that there is a need for a global set of internationally recognised sustainability reporting standards and for the IFRS Foundation to play a role in the development of these standards. The Trustees decided to conduct additional analysis on the feedback received on the requirements for success and will create a Trustee Steering Committee to oversee the project.

The Trustees are aiming to issue a proposal and establish a timeline by the end of September 2021 and may announce the establishment of a sustainability standards board at the United Nations Climate Change Conference COP26 in November 2021. 

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

Call for papers — Research on corporate disclosures that would benefit the work of the IASB

02 Feb, 2021

In conjunction with the IASB, 'Accounting in Europe' and 'The British Accounting Review' have published a joint call for research papers on corporate disclosures. One aspect research papers are invited on are specific areas of interest to the IASB.

Submissions are invited under three broad themes (studies combining two or all themes are especially welcome):

  1. Compliance with mandatory disclosure requirements;
  2. Specific areas of interest to the IASB;
  3. Alternative research approaches.

This website offers more information on possible topics under each theme, which for the specific areas of interest to the IASB include:

  • New standards and disclosure requirements,
  • Targeted standards-level review of disclosures,
  • Role of materiality in high quality disclosure and the impact of guidance on materiality,
  • Financial reporting and narrative disclosures, and
  • Taxonomy and benefits of tagged financial statements.

Authors are invited to submit their draft papers by 31 January 2022. It is expected that accepted papers will be published during the first half of 2023. Accepted papers will be highlighted on the website of the IFRS Foundation. Also, the initiative is linked to a workshop at the University of Glasgow. Papers presented there will be earlier drafts of the papers to be published.

 

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