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April

Updated IASB work plan — Analysis (April 2021)

30 Apr 2021

Following the IASB's April 2021 meeting, we have analysed the IASB work plan to see what changes have resulted from the meetings and other developments since the work plan was last revised in March 2021. The IASB has changed the display format of its work plan, which now, for example, also includes references to the standards affected.

Below is an analysis of all changes made to the work plan since our last analysis on 26 March 2021.

Stan­dard-set­ting projects

  • Disclosure Initiative — Subsidiaries that are SMEs — the issuance of an exposure draft is now expected in July 2021 (pre­vi­ously Q3 2021).
  • Management Commentary — As reported earlier, the issuance of an exposure draft is now expected in May 2021 (pre­vi­ously April 2021).
  • Second Comprehensive Review of the IFRS for SMEs Standard — This project has been moved from research project to standard-setting project; the next milestone continues to be an exposure draft with no date given.

Main­te­nance projects

  • IFRS 16 and COVID-19 — This project has been removed from the work plan due to the issuance of the IFRS amendments.
  • Lack of Exchangeability (Amendments to IAS 21) — Discussions on the feedback to the exposure draft published on 20 April 2021 are expected in H2 2021.

Research projects

  • Dynamic Risk Management — The project is now in the decide project direction stage. No expected date is given.
  • Extractive Activities — The decision on the project direction is pushed into Q3 2021 (previously May 2021).
  • Goodwill and Impairment — The decision on the project direction is now expected in May 2021 (previously April 2021).
  • Pension Benefits that Depend on Asset Returns — The review of the research is now expected in Q3 2021 (previously April 2021).
  • Post-implementation Review of IFRS 9 — Classification and Measurement — A request for information is now expected in Q3 2021 (previously H2 2021).

Other projects

  • IFRS Taxonomy Update — Amendments to IAS 1, IAS 8 and IFRS Practice Statement 2 — Discussions on the feedback on the proposed IFRS Taxonomy Update published on 21 April 2021 is expected in Q3 2021.
  • Sustainability Reporting — Feedback on the proposed amendments to the IFRS Foundation Constitution is expected in Q4 2021.
  • Third Agenda Consultation — Feedback on the request for information published on 30 March 2021 is expected in H2 2021.

The above is a faithful com­par­i­son of the IASB work plan at 26 March 2021 and 30 April 2021. For access to the current IASB work plan at any time, please click here.

April 2021 IASB meeting notes posted

30 Apr 2021

The IASB met on 27–28 April 2021 to discuss five topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

FICE: At its February meeting the staff presented papers on Terms and Conditions, Priority on liquidation and potential dilution, to enable the Board to make its decisions on the objectives and principles of the disclosure requirements and disclosures required to meet these objectives. The staff have brought back refinements to the proposals. The Board supported the staff recommendations for requirements to disclose information about key terms and conditions of instruments (including disclosure of debt-like features in financial instruments that are classified as equity, equity-like features in financial instruments that are classified as financial liabilities and debt-like and equity-like features that determine the classification of components of compound financial instruments); and the potential dilution of ordinary shares arising from financial instruments that could be settled by delivering ordinary shares (for example convertible bonds and derivatives on own equity). The Board asked the staff to bring back the recommendations in relation to liquidation (such as its capital structure disaggregated into categories to enable users of the financial statements to understand its capital structure and the quality of different categories of capital, including priority on liquidation) after undertaking additional analysis.

Dynamic Risk Management: At this meeting, the Board discussed the feedback from outreach focused on banks. The main messages are that almost all participants supported the objective of the DRM model, but that as risk management strategy commonly defines the target profile on a risk limit basis, this should be incorporated into the DRM model to better reflect the risk management view. Most participants indicated that the issue of accounting mismatch is still not fully resolved in the DRM model or is inconsistent with accounting practices. All participants were concerned about the potential impact of recognising changes in fair value of derivatives in OCI on the regulatory capital and volatility of the capital. Many participants also commented on implementation costs and change of current practices, users’ need for information about DRM and disclosure of sensitive information. Almost all participants responded positively to the ability to designate a net open risk position or core demand deposits. However, in respect of prepayable assets, most participants suggested that the designation of the layer of nominal amounts instead of a percentage (proportion) of portfolio should be allowed. The Board provided feedback and the staff will develop a plan for the next steps in the project.

Goodwill and Impairment: At this meeting, the Board discussed feedback from users of financial statements and feedback on disclosing information about business combinations, the effectiveness of the impairment test and whether to reintroduce amortisation of goodwill. There was support for enhancing the disclosures for business combinations, including information about subsequent performance of business combinations, but some concerns about the monetary and proprietary costs of doing so. The papers on making a more effective impairment test at a reasonable cost and whether amortisation should be reintroduced were not discussed and are being carried forward to a future meeting. The Board was not asked to make any decisions.

Maintenance and Consistent Application: The Board ratified the Agenda Decision: Configuration or Customisation Costs in a Cloud Computing Arrangement (IAS 38). The staff presented the latest IFRIC Update. Board members did not comment on either matter.

Primary Financial Statements: The Board discussed the principles of aggregation and disaggregation and the roles of the primary financial statements and notes. The Board decided to state more clearly the principle relating to the purpose of disaggregation (i.e. items shall be disaggregated if the resulting disaggregated information is material). The Board also decided to include a reference to understandability in the description of the primary financial statements when considering the role of the primary financial statements and the notes.

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

IFRS Foundation Trustees propose amendments to the Constitution

30 Apr 2021

The Trustees of the IFRS Foundation have proposed amendments to the IFRS Foundation Constitution that would enable the creation of a new sustainability standards board under the governance of the Foundation. They have also released a feedback statement summarising the main messages they received in response to their sustainability consultation paper.

Proposed amendments to the Constitution

The Trustees are proposing amendments that are a prerequisite for creating a potential International Sustainability Standards Board (ISSB) within the governance structure of the IFRS Foundation. They regard:

  • The objective of the IFRS Foundation. The objective of the IFRS Foundation would be amended to state that the IFRS Foundation has two standard setters: The International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB). Through the ISSB, the IFRS Foundation would "develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted sustainability standards based upon clearly articulated principles".
  • The governance of the ISSB and the IASB. The Trustees propose that the Constitution is amended to stipulate that the Executive Director of the Foundation is appointed by the Trustees, in consultation with the chairs of the IASB and the ISSB. This proposed amendment would clarify reporting lines in an organisation with two standard-setting boards.
  • The name of the new board and its standards. The Trustees propose to name the new board the 'International Sustainability Standards Board (ISSB)'. The new board’s standards would be known as ‘IFRS sustainability standards’.
  • The composition of the ISSB. The new board would normally comprise 14 members. The members of the ISSB would appointed by the Trustees. A minority of ISSB members could be part-time members. The main qualifications for membership of the ISSB would be professional competence and relevant professional experience. The board would comprise three members from the Asia-Oceania region, three members from Europe, three members from the Americas, one member from Africa, and four members appointed from any area. The Chair would be chosen by the Trustees from among the full-time members as would a potential Vice-Chair be.

Please click to access the proposed amendments on the IASB website. Comments are requested by 29 July 2021.

Feedback statement

In September 2020, the Trustees published a consultation paper to assess demand for global sustainability standards and what role the Foundation might play in the development of such standards. They received 577 comment letters indicating great international demand for global sustainability standards and broad support for establishing a standard setter for these standards under the governance of the IFRS Foundation. The feedback statement summarises the responses and states how the Trustees have responded to the feedback.

Please click to access the feedback statement on the IASB website.

A press release announcing the publication of the proposed amendments to the Constitution and the feedback statement is available on the IASB website.

In addition, see Deloitte's Need to know on the proposed amendments.

EFRAG BCUCC briefing

30 Apr 2021

The Secretariat of the European Financial Reporting Advisory Group (EFRAG) has published a briefing ​paper as part of the EFRAG strategy to stimulate debate on the IASB discussions on how to account for ​business combinations under common control.

For the briefing paper, the EFRAG Secretariat has ​considered how the ​​proposals in the IASB discussion paper would apply to specific transfers of businesses under common control, in particular those that raise questions about the application of IFRSs. The briefing paper does not include questions to constituents. However, constituents are invited to express their views on the topic when responding to the EFRAG draft comment letter​.​

Please click to access the briefing paper through the press release on the EFRAG website.

IFRS Foundation to hold virtual conference

29 Apr 2021

The IFRS Foundation has announced its annual conference will be held virtually on 3–4 June 2021 due to covid-19 restrictions.

The virtual con­fer­ence will include “panel discussions on capital markets and international financial reporting during the past 20 years with key people from this arena; an interactive panel session on the future of corporate reporting with investors, preparers and auditors; and the latest developments in the IFRS Foundation Trustees’ work on sustainability reporting.”

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

Podcast on IFRS Interpretations Committee developments

28 Apr 2021

The IASB has issued a podcast on the developments of the IFRS Interpretations Committee during the first quarter of 2021.

The podcast is hosted by IFRS In­ter­pre­ta­tions Committee Chair and IASB Vice-Chair Sue Lloyd and Technical Staff member Patrina Buchanan and focuses on the definition of net realisable value (IAS 2), sale of a subsidiary with a leaseback (IFRS 10 and IFRS 16), accounting policies and accounting estimates (IAS 8), and rent concessions (IFRS 16).

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

IFRS Foundation publishes fourth compilation of IFRS Interpretations Committee agenda decisions

28 Apr 2021

The IFRS Foundation has issued, “Compilation of Agenda Decisions — Volume 4” which contains all the agenda decisions made by the IFRS Interpretations Committee from October 2020 to March 2021.

The IFRS Foun­da­tion initiated the new com­pi­la­tion series in October 2019 and will continue it by pub­lish­ing new volumes bian­nu­ally in April and October. For more in­for­ma­tion, see the press release and com­pi­la­tion on the IASB website.

Final report on the EC's fitness check on public reporting by companies

28 Apr 2021

In March 2018, the European Commission (EC) initiated a "fitness check assessment" on public reporting by EU companies. The final results of this assessment have now been published.

The effectiveness of the EU framework for public reporting by EU companies was first assessed against the immediate objectives of providing stakeholders with financial and non-financial information that is sufficient in quantity and quality, relevant, comparable, reliable and timely. The framework was then assessed in terms of its contribution to broader EU objectives of (i) an efficient functioning of the single market, (ii) an integrated capital market, (iii) financial stability and (iv) sustainable growth.

As reported in March 2018, the original consultation document seemed oddly tilted against the use of IFRSs as issued by the IASB. However, the final report now concludes:

Overall, the EU framework for corporate reporting achieves the immediate objectives to a great extent. In particular, the IAS Regulation appears to be the most effective instrument in ensuring high-quality and comparable public financial information across the EU.

In the context of the deeper analysis of the IAS Regulation, the report notes that the IAS Regulation provides limited flexibility to amend standards as issued by the IASB, in case a standard would not meet the technical endorsement criteria or not be conducive to the EU public good. However, the report also states that the EU has so far been able to deal with such situations using the limited flexibility available within the confines of the IAS Regulation and has only needed to do so very sparingly.

As a potential follow-up on the IAS Regulation, the report notes:

The IAS Regulation appears to be the most effective instrument in ensuring comparable and complete financial information across Europe. Based on further consultation with all stakeholders, a comprehensive cost-benefit analysis could be carried out to assess whether to expand the scope of EU-endorsed IFRS to all companies listed on regulated markets and, as a company option, to small and medium-sized enterprises (SMEs) that plan to issue securities or to larger non-listed companies.

The fitness check also extended to the EU Non-Financial Reporting Directive, which is described as "a pioneering piece of legislation when it was adopted in 2014". However, the report notes that it may no longer be an adequate response to new challenges, in particular the growing needs of investors and other stakeholders for sustainability information. The report, therefore, assesses that this aspect of the EU framework for corporate reporting "does not ensure that reporting practices are adequate to enable stakeholders to make informed decisions and hold companies accountable for their impact". A revision of the Non-Financial Reporting Directive is currently underway, and a proposed Corporate Sustainability Reporting Directive was published last week.

Please click to access the final report on the fitness check, which also looked at the Accounting Directive, the Bank Accounts Directive, the Insurance Accounts Directive, and the Transparency Directive, on the EC website.

Summary of the March 2021 ASAF meeting now available

27 Apr 2021

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held via remote participation on 18 - 19 March 2021.

The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

  • Primary financial statements (1–27): The ASAF members discussed the plan to redeliberate the project proposals in the light of the feedback on the exposure draft published in December 2019. Proposals the Board plans to redeliberate include subtotals and categories, management performance measures as well as disaggregation.
  • Agenda consultation (28–44): The ASAF members discussed the main areas of the forthcoming request for information and possible outreach activities .
  • Management commentary (45–60): The staff introduced the forthcoming exposure draft and ASAF members shared tentative outreach plans for their jurisdictions.
  • Post-implementation review of IFRS 9 (61–64): ASAF members shared their views on the application of the classification and measurement requirements in IFRS 9 and on matters that they think the Board should consider as part of the post-implementation review of these requirements.
  • Post-implementation review of IFRS 10, IFRS 11 and IFRS 12 (65–80): ASAF members shared their initial views and comments they had received on the matters in the Request for Information on the post-implementation review of IFRS 10, IFRS 11 and IFRS 12.
  • Extractive activities (81–100): ASAF members discussed the Board's plans to determine the scope and direction of any project on extractive activities.
  • Project update and agenda planning (101–105): The ASAF members discussed the Board’s current work plan and planned topics for the June 2021 ASAF meeting. They also questioned whether the IASB should continue to provide written updates about the Board’s work plan at ASAF meetings.

A full summary of the meeting is available on the IASB's website.

IFRS Interpretations Committee holds April 2021 meeting

23 Apr 2021

The IFRS Interpretations Committee met via video conference on 20 April 2021. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

The Committee discussed the comment letter analyses for three tentative agenda decisions:

IAS 19 Employee Benefits—Attributing Benefit to Periods of Service: In December 2020, the Committee discussed the periods of service to which an entity attributes the benefit for a defined benefit plan when the amount of the retirement benefit to which an employee is entitled depends on the length of service before retirement. The Committee concluded that the entity attributes the period of service to only the last 16 years of employee services. A number of respondents commented that the Committee should not rule out the possibility of attributing the obligation from the date of employment applying the overarching objective in IAS 19:1.

The Committee decided to finalise the agenda decision with some suggested changes to wording. The matter will also be reported to the Board due to the complexity of IAS 19.

IAS 1 Presentation of Financial Statements—Classification of Debt with Covenants as Current or Non-current: In December 2020, the Committee discussed the informal feedback and enquiries received concerning the different interpretations arising from the application of recent amendments to IAS 1 related to the classification of liabilities. In the meeting, the Committee members generally agreed with the analysis of how an entity determines whether it has "the right to defer settlement" when a long-term liability is subject to a condition and its compliance with the condition is tested at dates after the reporting date, applying the amended IAS 1, in the three cases described. However, almost all of the respondents expressed concerns about the outcome of applying the IAS 1 amendments and suggested the matter be referred to the Board.

The Committee decided not to finalise the agenda decision at this moment but to defer the matter to the Board, particularly highlighting the new information raised by the respondents.

IFRS 9 Financial Instruments—Hedging Variability in Cash Flows due to Real Interest Rates: In December 2020, the Committee discussed whether a hedge of the variability in cash flows arising from the changes in the real interest rate could rebut the presumption in IFRS 9:B6.3.13 and be accounted for as a cash flow hedge. The Committee members generally agreed with the staff's conclusion that hedge accounting cannot be applied to the inflation swap in the fact pattern described. Half of the respondents to the tentative agenda decision did not agree with the discussion explaining that cash flow hedge accounting could not be applied. The staff analysed the reasons for the disagreement and continue to support the conclusion in the agenda decision.

The Committee decided to finalise the agenda decision with the suggested change made by the Committee members. At the same time, the matter would be reported to the Board due to the concerns raised

More In­for­ma­tion

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

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.