Regarding the discussion paper Business Combinations under Common Control, we generally agree with the Board’s preliminary views as expressed in the discussion paper. In particular, we agree that different methods should be applied depending on the characteristics of the receiving entity. We agree that when the receiving entity does not have non-controlling shareholders, use of a book-value method is justified by cost-benefit considerations. However, we do not agree that the receiving entity should be required to use the transferred entity’s book values. We also agree that the acquisition method is likely to provide more relevant information to investors that must rely on general purpose financial statements of the receiving entity to obtain the information they require. Accordingly, we believe that the application of the acquisition method should be required more broadly than what is proposed in the discussion paper. Please click to download our full comment letter here.

Regarding the exposure draft Lack of Exchangeability (Proposed amendments to IAS 21), we acknowledge that the use of an official exchange rate may not produce meaningful results when this rate is not available to the entity. However, we do not believe that attempting to estimate the exchange rate that would have been available if the currency had been exchangeable would produce meaningful results either. Accordingly, we believe that the Board should seek a solution that gives precedence to comparability. Please click to download our full comment letter here.

The Streamlined Energy and Carbon Reporting (SECR) taxonomy has been included in all of the taxonomies except for the Irish extension. In addition, the taxonomy now supports a Welsh label linkbase. Taskforce on Climtate-related Financial Disclosures (TCFD) disclosures in the SECR have been augmented to allow for more detailed tagging. HMRC’s Detailed Profit & Loss (DPL) taxonomy extension is now part of the Directors’ Report.

The feedback period ends on 16 September 2021. The press release (including a link to the draft FRC Taxonomies 2022 suite) is available on the FRC website.

The Draft Comment Letter supports the principles contained in the ED but highlights the following points:

• consultation with stakeholders has identified concerns about the practical application of the ED's proposals including issues on comparability, the impact on digital financial reporting, the application of judgement and issues of audit and enforceability.
• the UKEB has reservations about supporting the amendments to IFRS 13 and IAS 19 without first understanding whether the guidance described in the ED will be adopted and applied to other existing or future IASB standards.  The UKEB highlights "if the methodology is not used elsewhere, it will lead to inconsistent principles for disclosures being applied within IFRS, with the risk of confusing preparers and users and possibly resulting in inconsistent application".
• the UKEB recommends that the IASB first considers all feedback relating to the proposed approach to disclosure to determine how and when this will be used for existing and future standards. Once that decision has been reached, it recommends that the IASB re-expose the amendments to IFRS 13 or IAS 19.  The UKEB comments that this will help resolve its concern that it is difficult to support changes to these standards without understanding whether the proposed guidance will be applied to other standards.

Comments are requested by 01 November 2021. The draft comment letter and separate invitation to comment are available on the UKEB website.

UKEB also published a survey to gather stakeholder feedback on the changes to disclosure proposed in IASB’s ED/2021/3 Disclosure Requirements in IFRS Standards – A Pilot Approach. The survey is open until 12 November 2021.The Survey can be accessed here.

The proposals strengthen the Audit Firm Governance Code in key areas of accountability and firm resilience.  They refine the stated purpose of the Code, retaining a focus on promoting audit quality, while shifting the emphasis more squarely onto the public interest and reframing the third objective around audit firm resilience.  The proposals:

• strengthen the Code in those areas where the FRC have identified gaps in the 2016 Code or weaknesses in firm implementation;
• provide greater clarity in areas where stakeholders tell the FRC the 2016 Code is insufficiently precise or detailed;
• reflect recent developments in good governance practice;
• eliminate or reduce overlap with requirements based in law, regulation or standards;
• align the Code with the language and intent of the new International Standards on Quality Management (UK); and
• establish the boundaries between the responsibilities of independent non-executives (INEs) and Audit Non-Executives in firms with operationally-separate audit practices, currently the "Big Four".

Comments on the proposed changes are open until 18 November 2021. 

The press release and the full consultation are available on the FRC website.

The amendment extends, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification.

The Commission Regulation amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council was published in the Official Journal of the European Union on 30 August 2021.

EFRAG has updated its endorsement status report to reflect that the European Union has adopted the amendments.

Please click to access the updated alignment dashboard prepared for the September 2021 IPSASB meeting on the IPSASB website.

In this context, please see also our 2021 edition of IPSAS in your pocket published in February.

The discussion paper notes that that the value relevance of financial statements is decreasing, which could be due to financial statements not reflecting information about intangibles, which has become more important for more entities than previously. Insufficient information on intangibles could affect the company’s market value due to information asymmetry, result in an inefficient capital allocation in society and make assessment of the management’s stewardship difficult. It is also difficult for users to compare entities that grow organically with those growing by means of acquisition, as current IFRSs generally require acquired intangibles to be recognised, while internally generated intangibles can only be recognised in specific circumstances.

The discussion paper considers three approaches for better information on intangibles:

• Recognition and measurement in the primary financial statements;
• Information on specific intangibles in the notes to the financial statements or in the management report;
• Information on future-oriented expenses and risk/opportunity factors that may affect future performance in the notes to the financial statements or in the management report.

The scope of EFRAG’s discussions goes beyond the existing definition of assets in financial reporting and also covers sources of possible economic benefits that would not be controlled by an entity. Therefore, the DP uses the term “intangibles” instead of “intangible assets”. The press release also notes that future reporting on intangibles and value creation is a key area for connecting financial and sustainability reporting.

Comments on the discussion paper are requested by 30 June 2022.

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

• Press release
• Discussion paper

Update: It is now also possible to react to the discussion paper by taking part in a survey.

This issue features:

• In profile — Philip Robinson, accounting specialist in the Corporate Finance Group at Moody's
• We need your views
• Stay up to date
• Resources for investors

The Investor Update newsletter is available on the IASB’s website.

There will be pre-conference video updates about the activities of the IASB, the activities of the IFRS Interpretations Committee and the sustainability initiative of the IFRS Foundation. The conference itself will feature live Q&A sessions on these updates to which participants can submit questions in advance.

There is also a pre-conference survey participants are invited to complete that surveys how the pandemic is affecting how national standard-setters engage with the IFRS Foundation. There will be a panel discussion on the results of the survey during the conference.

A summary of the preliminary programme for the conference is set out below:

Please click to access all information currently available on the IASB website.

The WSS meeting will be immediately followed by a meeting of the International Forum of Accounting Standard Setters (IFASS) on 29-30 September 2021.

Please click for more information on the EFRAG website. The application deadline is 15 September 2021.