Below is an analysis of all changes made to the work plan since our last analysis on 1 November 2021.

Standard-setting projects

• Disclosure initiative — Subsidiaries without public accountability: Disclosures — Feedback on the exposure draft will now be discussed in Q2 2022 (previously H1 2022)
• Disclosure initiative — Targeted standards-level review of disclosures — Feedback on the exposure draft will now be discussed in Q2 2022 (previously Q1 2022)
• Rate-regulated activities — After the discussion of the feedback on the exposure draft in October and November 2021, a decision on the project direction is now expected in December 2021

Maintenance projects

• Non-current liabilities with covenants — After publication of the exposure draft on 19 November 2021 the next project step in now the discussion of the feedback on the exposure draft in H1 2022; the project has also been renamed from the previous Classification of debt with covenants as current or non-current

Research projects

• Dynamic risk management — A decision on the project direction is now expected in Q1 2022 (previously H1 2022)
• Equity method — A decision on the project direction is now expected in Q1 2022 (previously no date given)
• Extractive activities — A decision on the project direction is now expected in H2 2022 (previously H1 2022)
• Goodwill and impairment — A decision on the project direction is now expected in Q2 2022 (previously Q1 2022)
• Pension benefits that depend on asset returns — The publication of a project summary is now expected in H1 2022 (previously no date given)

Other projects

• IFRS Taxonomy Update — 2021 General improvements and common practice — The date entry for a proposed update (December 2021) has been removed from the work plan
• IFRS Taxonomy Update — 2021 technology update — Newly added to the work plan with an expected date December 2021for the proposed update
• Sustainability-related reporting — The entry that was erraneously kept in the work plan has been removed with the announcement of the creation of the new ISSB

The above is a faithful comparison of the IASB work plan at 1 November 2021 and 23 November 2021. For access to the current IASB work plan at any time, please click here.

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 23 November 2021.

The regulation adopts IFRS 17 Insurance Contracts and the June 2020 amendments to IFRS 17 with the same effective date as the IASB (1 January 2023). However, the regulation provides an optional exemption from applying the annual cohort requirement that relates to the timing of the recognition of the profit in the contract, the contractual service margin, in profit or loss. Entities making use of the exemption are not applying IFRSs as issued by the IASB and need to disclose the fact. The regulation states:

Investors should be able to understand if a company has applied the exemption from the annual cohort requirement for groups of contracts. A company should therefore disclose in accordance with International Accounting Standard 1 Presentation of Financial Statements, in the notes to its financial statements the use of the exemption as a significant accounting policy and provide other explanatory information such as for which portfolios it has applied the exemption.

The regulation also notes that Commission should by 31 December 2027 review the exemption from the annual cohort requirement taking into account the IASB post-implementation review of IFRS 17.

EFRAG has updated its endorsement status report to reflect the adoption.

The two boards informed each other about their respective activities and exchanged views on technical topics in which they both have an interest, including rate-regulated activities and the IASB’s third agenda consultation. The UKEB also updated the AcSB on its activities relating to its assessment of IFRS 17 for adoption for use in the UK. For more information about the latest meeting, see the press release on the UKEB website.

The UKEB would like to hear views from as many UK stakeholders as possible to ensure those views are reflected in its response to the IASB. 

Additionally the UKEB Secretariat seeks feedback on the IASB's Post Implementation Review of IFRS 9 Financial Instruments, Classification & Measurement via a survey.

Further details and information on how to register for the roundtables are available on the FRC website. The survey can be accessed here.

Respondents to the consultation especially stressed the need for proper due process and transparency during the work that is already being carried out before the new Sustainability Standards Board has been established, the need for an orderly and transparent transition to the new governance structure, and the need to build on existing standards and frameworks for sustainability reporting and accounting and to cooperate with other standard setters in the field, especially the IFRS Foundation's ISSB.

The summary of responses is available on the EFRAG website.

Please click to access the updated alignment dashboard prepared for the December 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 report provides an assessment of the UK audit market as a whole and also sets out the FRC's expectations of how audit firms should deliver audit quality improvements so that the market works more effectively and in the public interest.

The report indicates that whilst there have been some successful improvement measures made at audit firms, 'audit quality remains mixed and inconsistent across the firms and in some instances, between audits at the same firms'. 

The FRC still finds deficiencies relating to lack of professional scepticism by auditors and also in the challenge of management assumptions.  However it has also seen some examples of good practice in the use of internal and external specialists to challenge management's assumptions, the delaying of audit opinion sign-offs to ensure sufficient time was available and robust challenge of the component auditor's work by group auditors.  

Due to an 'unacceptable' level of audits requiring improvements with respect to smaller firms which audit public interest entities, the FRC has increased its supervisory resources in that area to drive through improvements.  The FRC has recently published a guide on what make a good audit which sets out its views on what constitutes a good or high-quality audit, focusing on two key areas: how the audit itself is run and what makes for a high-performing audit practice.  It indicates that this will be 'particularly useful for the smaller firms as they continue to build their capability and capacity'.

The Developments in Audit Report also includes an overview of the FRC's supervisory work, audit market trends and new UK auditing standards.

A press release and the Developments in Audit Report are available on the FRC website.

The Committee will discuss the following:

• IFRS 15 — Principal versus agent: software resellers
• IFRS 16 — Economic benefits from use of a windfarm
• IAS 37 — Negative low or new energy vehicle credits
• IFRS 9 — TLRO III transactions
• Work in progress

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.

More in­for­ma­tion about the issues is set out below:

Click to access all our comment letters to the IASB, IFRS Foun­da­tion, and IFRS In­ter­pre­ta­tions Committee.

Background

In January 2020, the Board issued Classification of Liabilities as Current or Non-current, which amended IAS 1 Presentation of Financial Statements. The amendments clarified how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances. The amendments are effective for annual reporting periods beginning on or after 1 January 2023, with earlier application permitted.

In December 2020, the IFRS Interpretations Committee published a tentative agenda decision in response to informal feedback and enquiries about how an entity applies the amendments to particular fact patterns. After considering feedback to its tentative agenda decision, the Committee handed the matter over to the IASB as that feedback provided information about situations the Board did not specifically consider when developing the 2020 amendments.

In response to that new information, the Board tentatively decided to amend IAS 1 with respect to classification (as current or non-current), presentation and disclosures of liabilities for which an entity’s right to defer settlement for at least 12 months is subject to the entity complying with conditions after the reporting period.

Key proposals

The main proposals in ED/2021/9 Non-current Liabilities with Covenants (Proposed amendments to IAS 1) would: 

• Modify the requirements introduced by Classification of Liabilities as Current or Non-current on how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances: The Board proposes that conditions an entity must comply with within twelve months after the reporting period would have no effect on whether an entity has the right to defer settlement of a liability for at least twelve months after the reporting period, i.e. such conditions have no effect on the classification of a liability as current or non-current. When an entity classifies such a liability as non-current, however, it would be required to disclose information that enables users of financial statements to assess the risk that the liability could become repayable within twelve months. An entity would also present separately, in its statement of financial position, liabilities classified as non-current for which the entity’s right to defer settlement for at least twelve months after the reporting period is subject to compliance with certain conditions within twelve months after the reporting period.
• Defer the effective date of the 2020 amendments to no earlier than 1 January 2024.

The deadline for submitting comments on these proposals is 21 March 2022.

Effective date

The Board intends to decide on the effective date after exposure, but the date would be no earlier than 1 January 2024. The amendments would be applied retrospectively in accordance with IAS 8. Earlier application would be permitted.

Alternative views

The exposure draft contains alternative views by two Board members. Both members dissented because they disagree with the Board’s proposal to require an entity to present separately, in its statement of financial position, non-current liabilities subject to covenants. They would have preferred these conditions to be communicated through the notes to the financial statements.

Additional information

The following additional information is available on the IASB website and on IAS Plus:

• IASB press release
• Access to the exposure draft (includes basis for conclusions)
• Snapshot overview of the proposals
• Our UK Accounting Plus Project page on IAS 1 — Classification of debt with covenants as current or non-current
• Our related Need to know publication