IASB issues podcast on latest Board developments (October 2021)

08 Nov, 2021

The IASB has released a podcast featuring IASB Chair Andreas Barckow and IASB Vice-Chair Sue Lloyd discussing deliberations at the Ocotber 2021 IASB meeting.

Highlights of the podcast include discussions on:

  • Goodwill and impairment;
  • Primary financial statements;
  • Post-implementation review of IFRS 10, IFRS 11 and IFRS 12;
  • Rate-regulated activities;
  • Second comprehensive review of the IFRS for SMEs;
  • Pension benefits that depend on asset returns;
  • Equity method;
  • Narrow scope amendment to IFRS 17; and
  • Ratification of tentative agenda decisions of the Interpretations Committee.

The podcast can be accessed through the press release on the IASB website.

Please click to view the detailed notes taken by Deloitte observers for the IASB meeting.

November 2021 IASB meeting agenda posted

05 Nov, 2021

The IASB has posted the agenda for its next meeting, which will be held in London on 15–16 and 19 November 2021. There are eight topics on the agenda.

The Board will discuss the following:

  • Rate-regulated activities
  • Dynamic risk management
  • Second comprehensive review of the IFRS for SMEs Standard
  • Goodwill and impairment
  • Primary financial statements
  • Board work plan — Timing of PIRs
  • Post-implementation review of IRS 10–12
  • Third agenda consultation

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.

UKEB research project on goodwill

05 Nov, 2021

The UK Endorsement Board (UKEB) has commenced a research project to analyse the potential impact of reintroducing amortisation for the subsequent measurement of goodwill.

The project will provide UK-specific information to the International Accounting Standards Board (IASB) during its redeliberations on its Discussion Paper 2020/1 Business Combinations: Disclosures, Goodwill and Impairment.

The project will explore:

  • how a hybrid model for subsequent measurement of goodwill, i.e. an annual amortisation charge supported by impairment testing, can provide information that is useful for users;
  • how transitioning to such a hybrid model might affect the financial position of a group or company;
  • potential approaches to estimating the useful life of goodwill for amortisation purposes; and
  • transitional arrangements and cost implications.

UKEB also invites UK IFRS reporters and their lenders to complete a short survey to contribute views on the practical implications of a potential transition to a hybrid model, including the impact on debt covenants and legal and regulatory requirements. The survey is open until 26 November 2021. 

Click here for more information on the UKEB website and here to access the survey.

UKEB outreach event on Subsidiaries without Public Accountability

05 Nov, 2021

The UK Endorsement Board (UKEB) Invites stakeholders to a series of outreach activities on the IASB Exposure Draft ED/2021/7 Subsidiaries without Public Accountability: Disclosures (ED).

The ED seeks to develop an accounting standard that would permit eligible subsidiaries to apply reduced disclosure requirements as long as the subsidiary applies the recognition, measurement and presentation requirements in IFRS Standards.

The UKEB secretariat seeks input and feedback from UK stakeholders as it develops its response to the IASB’s Exposure Draft ED/20212/7 Subsidiaries Without Public Accountability: Disclosures. For this purpose, UKEB invites stakeholders to attend two upcoming roundtables on 24 November and 26 November 2021.

UKEB secretariat has published a video exploring the IASB Exposure Draft ED/2021/7 Subsidiaries without Public Accountability: Disclosures (ED).The video provides an overview of the proposals in the ED, giving an insight into the IASB thinking behind these proposals and highlighting the UKEB timeline and forthcoming UKEB outreach events. A link to the video and more information on the UKEB work on this project can be found on the UKEB website.

UKEB secretariat also published its survey on this ED. Stakeholder responses to the UKEB survey will be used as evidence for the UKEB’s comment letter to the IASB. It takes around 20 minutes to complete. We would particularly welcome input from preparers of subsidiary financial statements. The survey is open until COB 31 January 2022. The survey can be accessed here.

Further details and information on how to register for the event are available on the FRC website.

Two IOSCO speeches at COP26 focus on new ISSB

05 Nov, 2021

The International Organization of Securities Commissions (IOSCO) has released the transcripts of two speeches of the Chair of the IOSCO Board and the Chair IOSCO Sustainable Finance Task Force given at the Green Horizon Summit of COP26 in Glasgow.

The Chair of the IOSCO Sustainable Finance Task Force, Erik Thedéen, noted that IOSCO identified the IFRS Foundation as the vehicle to develop a global baseline for investor-oriented sustainability standards given its well-tested governance structure, its best-in-class reputation in setting international reporting standards and its proven record of transparent and inclusive due process. He stressed:

The ISSB global standards are the right tool to respond to the existing ‘alphabet soup’ of voluntary sustainability disclosures. They can drive much-needed international consistency and comparability in sustainability-related information, laying the groundwork towards high quality mandatory reporting.

Ashley Alder, Chair of the IOSCO Board, gave the keynote speech at the summit. He stressed that the new board under the IFRS Foundation umbrella offers the most credible mechanism for creating a baseline of disclosure standards, enabling a confusing picture to be superseded by a properly aligned global approach. He commented:

Crucially, the ISSB will develop a comprehensive global baseline of corporate climate disclosure standards which meet the information needs of investors. They will enable investors to align their investment strategies with the global transition to net zero and will also mitigate the ever-present risk of greenwashing. [...] The baseline disclosure standard can also cut a clear pathway to the adoption of a mandatory standard if jurisdictions choose to take that route. This is important because, in order to hold corporates properly accountable, the standard should be sufficiently enforceable. It is also crucial that it is an open standard which allows jurisdictions to build on the baseline to accommodate their own sustainability needs and circumstances.

Both speakers also stressed that IOSCO plans to thoroughly assess the ISSB proposals to ensure they meet the needs of investors before deciding whether IOSCO can endorse them. If IOSCO's expectations are met, the IOSCO Board would then endorse the new standards for over 130 market regulators.

Please click to access the two speeches on the IOSCO website:

Earlier, IOSCO also released a statement welcoming the creation of the ISSB.

UK government publishes draft legislation on climate-related financial disclosures

05 Nov, 2021

The Department for Business, Energy & Industrial Strategy (BEIS) has published draft regulations requiring UK public interest entities, Alternative Investment Market (AIM) companies and high turnover companies and Limited Liability Partnerships (LLPs) to make climate-related financial disclosures. The regulations, which amend the Companies Act 2006, will take effect for periods commencing on or after 6 April 2022.

Earlier in 2021 BEIS consulted on proposals to introduce mandatory climate-related financial disclosures for public interest companies, AIM companies, large private companies and LLPs. A draft statutory instrument has now been laid, entitled The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2021. This legislation will amend the Companies Act 2006 and introduce new disclosure requirements which are intended to align to the four pillars of the Taskforce on Climate-related Financial Disclosures (TCFD). 

According to BEIS' public release, the UK will become the first G20 country to enshrine in law mandatory TCFD-aligned requirements for Britain’s largest companies and financial institutions. The legislation will take effect for periods commencing on or after 6 April 2022, subject to Parliamentary approval.


The following entities will be within the scope of the new disclosure requirements:

  • All UK companies that are already required to produce a non-financial information statement, being UK companies that have more than 500 employees and have either transferable securities admitted to trading on a UK regulated market, or are banking companies or insurance companies (Relevant Public Interest Entities (PIEs));
  • UK registered companies with securities admitted to AIM with more than 500 employees;
  • UK registered companies which are not included in the categories above, which have more than 500 employees and a turnover of more than £500m.
  • LLPs which have more than 500 employees and a turnover of more than £500m.

Location of disclosures

Companies will be required to report climate-related financial information in the non-financial information (NFI) statement, which is also renamed by the legislation to become the non-financial and sustainability information statement (NFSI). 

LLPs will be required to report climate-related financial information in either the non-financial information statement which forms part of their Strategic Report or, if no Strategic Report is prepared, the Energy and Carbon Report which forms part of their Annual Report.

Disclosure requirements

In-scope entities will be required to disclose the following climate-related financial information in line with the four overarching pillars of the TCFD recommendations:

  • a description of the company’s governance arrangements in relation to assessing and managing climate-related risks and opportunities;
  • a description of the principal climate-related risks and opportunities arising in connection with the company’s operations, and the time periods by reference to which those risks and opportunities are assessed;
  • a description of the actual and potential impacts of the principal climate-related risks and opportunities on the company’s business model and strategy;
  • an analysis of the resilience of the company’s business model and strategy, taking into consideration different climate-related scenarios;
  • a description of how the company identifies, assesses, and manages climate-related risks and opportunities;
  • a description of how processes for identifying, assessing, and managing climate-related risks are integrated into the company’s overall risk management process;
  • a description of the targets used by the company to manage climate-related risks and to realise climate-related opportunities and of performance against those targets; and
  • a description of the key performance indicators used to assess progress against targets used to manage climate-related risks and realise climate-related opportunities and of the calculations on which those key performance indicators are based.

Non-binding Q&As will be produced to support companies and LLPs in their application of these requirements. Regarding scenario analysis, BEIS has stated in its response that qualitative analysis will be sufficient and will ensure that this is clear in the non-binding Q&A. 

A press releasethe feedback statement and the draft legislation are available on the UK Government’s website.

IFAC provides digital access to international standards

05 Nov, 2021

The International Federation of Accountants (IFAC) has launched the platform eIS, short for e-International Standards.

The new resource provides direct access to the standards developed by the International Audit and Assurance Standards Board (IAASB), the International Ethics Standards Board for Accountants (IESBA), and the International Public Sector Accounting Standards Board (IPSASB).

Please click for more information and access to the platform on the IFAC website.

EFRAG publishes its feedback statement on the IASB Exposure Draft 2021/04 Lack of Exchangeability

04 Nov, 2021

The European Financial Reporting Advisory Group (EFRAG) has published its feedback statement on the International Accounting Standards Board's (IASB's) Exposure Draft ED 2021/04 – ‘Lack of Exchangeability’.

EFRAG published its Final Comment Letter in September 2021.

The feedback statement summarises the main comments received by EFRAG on its draft comment letter and explains how the comments were considered by EFRAG during its technical discussions leading to the publication of EFRAG's final comment letter.

A press release and the feedback statement is available on the EFRAG website.

FCA publishes Discussion Paper on Sustainability Disclosure Requirements

04 Nov, 2021

The Financial Conduct Authority (FCA) has published Discussion Paper DP21/4 'Sustainability Disclosure Requirements and investment labels' (the DP).

The DP follows the publication of the Government’s Roadmap to Sustainable Investing in October 2021 which set out the government's ambitions on climate change and green finance and sets out how it will realise those ambitions.  Two initiatives, in particular, will require action from the FCA to implement them.  These are with respect to sustainability disclosure requirements (SDR's) (where companies, including listed issuers, assets managers and asset owners, will be required to report on their sustainability risks, opportunities and impacts and provide disclosures relating to the forthcoming UK Green Taxonomy) and sustainable investment labels (where certain investment products will be required to display a label reflecting their sustainability characteristics).  

The DP seeks initial views on the SDR disclosure requirements for asset managers and certain FCA-regulated asset owners, as well as the sustainable investment labelling system.  The FCA aims to consult in Q2 2022 on proposed new rules and will use the responses to the DP to develop its proposals.  The DP has a specific focus on:

  • sustainable investment labels;
  • consumer-facing disclosures for investment products; and
  • client- and consumer-facing entity- and product-level disclosures by asset managers and FCA-regulated asset owners.

The DP focuses on the elements of SDR relevant to firms involved in investment management and decision-making processes.  It will consider how best to introduce specific sustainability-related requirements for financial advisors in due course.

Responses to the DP are requested by 7 January 2022. 

The Discussion Paper is available on the FCA website. 

Papers presented at the eighth IASB Research Forum

04 Nov, 2021

The International Accounting Standards Board (IASB) hosted its eighth Research Forum on 3 and 4 November 2021 as a virtual event. The meeting saw the presentation of nine academic papers as well as responses by academics and IASB members.

The first paper Implementation Costs of IFRS 9 for Non-Financial Firms: Evidence from China examined the implementation of the new CAS 22 (equivalent to IFRS 9 Financial Instruments) by Chinese non-financial firms. The authors found that the new accounting standard for financial instruments imposed severe implementation costs on affected firms. They concluded that requirements in the new standard, such as fair value measurement and expected credit loss, present significant implementation challenges for companies and auditors. Overall, the paper concluded that there is evidence that supports the concern that the new accounting standard for financial instruments could be costly for non-financial firms to implement.

The second paper Does IFRS and GRI adoption impact the understandability of corporate reports by Chinese listed companies? examined the level of readability and conciseness of corporate reports and whether IFRS and GRI adoption impacts these aspects of understandability. The authors found that both readability and conciseness of the corporate reports are at a low level and indicate a downward trend over the sample period. They also found that IFRS adoption results in a longer and more readable report, whereas GRI adoption leads to a longer but less readable report.

The third paper Is AASB 6 still fit for purpose? reported on a project completed for the Australian Accounting Standards Board (AASB) as input to the IASB’s project on the extractive industries. The research carried out by the authors showed the primary area of concern related to impairment of exploration and evaluation assets and closure obligations. In addition, the provisioning for site rehabilitation and the difficulties of applying the new leasing standard were noted as accounting challenges. The uncertainty around the future treatment of climate change impacts was also especially noted. Based on the evidence, the paper recommended to proceed with the development of amendments to IFRS 6 Exploration for and Evaluation of Mineral Resources to enhance disclosure requirements.

The fourth paper Do Acquiring Firms Achieve Their Mergers and Acquisitions Objectives?: Evidence from Japan assessed whether acquiring firms achieve the mergers and acquisitions objectives presented in their press releases and financial statements. The study’s findings show that disclosed mergers and acquisitions objectives regarding profitability, efficiency, and growth are usually not realised. The authors also found that describing mergers and acquisitions objectives in financial statements leads to higher short-term stock returns while the stock market adjusts the valuation of firms based on their actual performance in the long run.

The fifth paper The Impact of IFRS Adoption on the Value Relevance of Accounting Information in Saudi Arabia examined the joint and relative value relevance of book value of equity and earnings before and after the mandatory adoption of IFRSs in Saudi Arabia. The study identified a significant and positive change in the relative value relevance of book value of equity after IFRS implementation. The authors also found that profitable firms, firms audited by big4 and large firms exhibit significantly higher joint value relevance compared to their counterparts regardless of the implemented accounting standards.

The sixth paper Decision usefulness of the accounting standard ‘IFRS for SMEs’: Qualitative evidence from Sri Lanka examined the information needs of the users of Sri Lankan small and medium entities' financial statements. The primary users of financial information were identified as banks, the inland revenue department and other government institutions. However, the authors found that the manipulation of financial results, tax orientation, insufficient detail, and out-to-date information mean that the financial statements prepared by Sri Lankan small and medium entities lack decision usefulness. The authors conclude that local standard setters need to pay greater attention to financial reporting by small and medium entities and take steps to make it more credible and relevant to the needs of users.

The seventh paper Is IFRS a “trusted” language for private firm credit decisions? An analysis of country differences in users’ perspectives examined whether creditors trust and use IFRS-based financial statement information for their decision-making in the context of private firm lending. The authors found that (i) IFRS accounting numbers are more trusted than local-GAAP based accounting numbers, (ii) the trust even increases when creditor protection is weak, and (iii) mandatory IFRS adoption in a country influences the trust in the numbers more positively than a voluntary adoption.

The eighth paper What Influences the Implementation of IFRS for SMEs? The Brazilian Case investigated factors influencing the implementation of the IFRS for SMEs in Brazil. The research carried out suggests that inconsistencies and incomprehensibility issues are the main factors preventing implementation. However, further investigation indicated that once participants know the standard, “implementation myths” are mitigated. The authors conclude that regulators should increase the availability of education programs, so accountants feel more secure and boost the standard’s implementation.

The last paper Fixing diluted earnings per share: recognising the dilutive effects of employee stock options proposed changes to the calculation of diluted earnings per share arguing that the existing IAS 33 approach was flawed as it ignores the time value of options and treats equity-settled options differently to cash-settled options. The authors derived an alternative method and then compared this with the IAS 33 calculation using examples based on a simple firm. The authors conclude that their method best describes the change in economic value of the current shareholders and provides a similar result at a diluted earnings per share level for both cash- and equity-settled options. It could also easily be extended to deal with other dilutive instruments.

Participants praised the valuable exchange and the evidence from research provided that is highly relevant to the IASB's current agenda. The evidence on the application of standards also covered geographical areas not usually covered by research or otherwise easily accessible or was of a granularity that normally goes beyond the means of the IASB to gather.

The presented papers as well as recordings of the presentations and contributions by the discussants will shortly be available on the IFRS Foundation website.

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