January

IFRS Foundation Trustees hold January 2022 meeting

31 Jan 2022

The IFRS Foundation Trustees met by video conference on 25 January 2022.

The meeting focused on ISSB nominations. The Trustees received a report related to the recently completed search for a Vice-Chair of the ISSB and the search for ISSB members. The Chair of the ISSB also provided an update on appointments planned for the role of Special Advisor to the ISSB Chair.

For more in­for­ma­tion, see the full summary on the IFRS Foun­da­tion Trustees’ meeting on the IASB’s website.

Deloitte comments on IASB’s proposal to reduce disclosure requirements

31 Jan 2022

We have commented on the IASB's exposure draft ‘Subsidiaries without Public Accountability: Disclosures’ published in July 2021.

The ED would permit eligible subsidiaries that are small and medium-sized entities (SMEs) to apply IFRSs but with reduced disclosure requirements.

We agree with the objective of the draft Standard which responds to requests from stakeholders and expect that the draft Standard will significantly reduce the cost of preparing financial statements applying IFRS Standards for subsidiaries of parents that report using these standards.  We agree that the Standard should only be available to subsidiaries that do not have public accountability. However, in addition to the requirement to meet the definition of an entity without public accountability proposed in the draft Standard, we suggest that an entity would be permitted to apply the draft Standard only if all of its owners, including those not otherwise entitled to vote, and outsiders for which the entity holds assets in a fiduciary capacity have been informed about, and do not object to, the entity applying the draft Standard. We also agree with the proposal to limit the scope to subsidiaries of a parent that produces consolidated

financial statements available for public use that comply with IFRS Standards and with the approach taken to developing the proposed disclosure requirements using the IFRS for SMEs Standard as a starting point and generally agree with the proposed disclosures that result from the application of this approach.

Please click to download our full comment letter.

IASB issues podcast on latest Board developments (January 2022)

31 Jan 2022

The IASB has released a podcast featuring IASB Chair Andreas Barckow and IASB Vice-Chair Sue Lloyd discussing deliberations at the January 2022 IASB meeting.

High­lights of the podcast include dis­cus­sions on: 

  • Updates and on goodwill and impairment and management commentary projects;
  • Feedback summary on the lack of exchangeability project;
  • Developments in the proposed taxonomy update for IFRS 17 amendments;
  • Stakeholder feedback on business combinations under common control;
  • Deliberations on the primary financial statements;
  • Role of post-implementation reviews.

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.

FRC publishes January 2022 editions of accounting standards

31 Jan 2022

The Financial Reporting Council ("FRC") has issued January 2022 editions of all UK and Ireland accounting standards. These editions reflect the amendments made since the previous editions were issued in 2018, as well as changes in Irish company law, resulting in a single up‑to‑date reference point for each standard.

Additionally, the FRC has issued revised editions of the Foreword to Accounting Standards and Overview of the financial reporting framework that reflect developments in accounting standards, legislation and regulation.

The FRC has issued the following documents:

  1. Foreword to Accounting Standards;
  2. Overview of the financial reporting framework;
  3. FRS 101 Reduced Disclosure Framework;
  4. FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland;
  5. FRS 103 Insurance Contracts;
  6. Implementation Guidance to accompany FRS 103 Insurance Contracts;
  7. FRS 104 Interim Financial Reporting; and
  8. FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime.

A new edition of FRS 100 will also be issued following changes to this standard expected later this year.

The press release and links to the revised editions are available on the FRC website. 

EFRAG final comment letter on the request for information on the post-implementation review of IFRS 9

31 Jan 2022

​​The European Financial Reporting Advisory Group (EFRAG) has published its Final Comment Letter in response to the International Accounting Standard Board’s (IASB's) request for information as a part of the Post-implementation Review ('PIR') of the classification and measurement requirements of IFRS 9 'Financial Instruments'.

EFRAG considers that the combination of the cash flow characteristics of the assets together with the assessment of the entity's business model has proved to generally provide an appropriate basis to align the measurement of financial instruments with how they are managed by the entity.  

However in its final comment letter, EFRAG notes a number of issues that are considered to be prevalent in Europe and might deserve standard-setting activities. EFRAG believes the following issues should be of highest priority:

  • Application of the SPPI test to sustainable finance products which EFRAG believes should be addressed urgently as a separate issue due to its expected pervasive effect in Europe.
  • The absence of recycling for FVOCI equity instruments.
  • The treatment of equity-type instruments, for example mutual funds and puttable instruments.

The press release and the final comment letter are available on the EFRAG website.

EFRAG final comment letter on the IASB's exposure draft on disclosure requirements in IFRS Standards

31 Jan 2022

The European Financial Reporting Advisory Group (EFRAG) has published its final comment letter on the International Accounting Standard Board’s (IASB's) Exposure Draft ED/2021/3 Disclosure Requirements in IFRS Standards - A Pilot Approach (Proposed Amendments to IFRS 13 and IAS 19)

The exposure draft contains proposed guidance for the IASB when developing and drafting disclosure requirements in IFRSs in future as well as proposed amendments to IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits that result from applying the proposed guidance to those standards.

In its final comment letter, EFRAG supports the objective of the project to improve the relevance of disclosures and to develop a more rigorous methodology for the IASB to define objective-based disclosure requirements.  EFRAG also agrees, in particular, with the proposal to work closer with users of financial statements and other stakeholders early in the standard-setting process to understand what information they need, and to articulate better how such information is intended to be issued. 

However EFRAG concludes that based upon its extensive outreach, field testing and consultation conducted with European stakeholders, that the proposed approach may not achieve its intended objective.  In particular EFRAG highlights that the proposed approach is likely to:

  • Be ineffective in addressing the disclosure problem and not result in providing more useful and relevant information and could even result in relevant information being omitted; 
  • Result in impairing comparability for users of financial statements by introducing a more flexible approach to disclosures;
  • Increase enforcement and audit challenges; and 
  • Be more costly for preparers and their auditors.

In light of the above, EFRAG suggests an alternative approach which it considers to be less radical whereby the IASB would combine the introduction of overall and specific objectives with a list of items of disclosures always required (subject to materiality assessment) to meet those objectives.  This would be complemented by application guidance describing users' needs and illustrative examples showing how to apply judgements to meet the objectives under various circumstances and supporting preparers, auditors and enforcers to develop a common understanding about the application of objectives-based disclosures.

EFRAG also encourages the IASB to further consider the interactions between its proposed approach to develop disclosure requirements and:

  • The role of the notes of the financial statements taken as a whole;
  • The increasing use of technology and digital reporting;
  • The application of the materiality concept; and
  • The assessment of stewardship.

The press release the comment letter and the feedback statement are available on the EFRAG website.

UKEB publishes its draft comment letter on supplier finance arrangements

31 Jan 2022

The UK Endorsement Board (UKEB) has published its draft comment letter in response to the International Accounting Standard Board’s (IASB's) Exposure Draft ED/2021/10 'Supplier Finance Arrangements (Proposed amendments to IAS 7 and IFRS 7)'.

The exposure draft adds disclosure requirements, and ‘signposts’ within existing disclosure requirements, that would ask entities to provide qualitative and quantitative information about supplier finance arrangements.

The UKEB supports the proposals in the ED highlighting that they will improve transparency about the use of supplier finance arrangements and enhance the ability of users of financial statements to assess the effects of those arrangements on an entity’s liabilities and cash flows, as well as on its liquidity risk and risk management.  To enhance the proposals the UKEB recommends:

  • that specific requirements be added to enable users to understand the magnitude of an entity's supplier finance arrangements.  The UKEB recommends that there should be specific requirements for an entity to disclose its accounting policy for the presentation of cash flows that are part of supplier finance arrangements; the amounts of those cash flows; and the line item(s) in the Statement of Cash Flows where they are presented.
  • that the proposed amendment in paragraph IG18 of IFRS 7, currently proposed only for the Implementation Guidance, be incorporated as part of the specific disclosure requirements in the Standard to ensure it is given appropriate prominence.

Comments on the draft comment letter are requested by 4 March 2022.

The press release, the draft comment letter and the invitation to comment are available on the UKEB website.

Deloitte comments on IASB’s Request for Information on the post-implementation review of IFRS 9

28 Jan 2022

We have commented on the IASB's Request for Information — Post-implementation Review IFRS 9 Financial Instruments Classification and Measurement (RFI) published in September 2021.

The RFI seeked comments from stakeholders to identify whether the classification and measurement requirements in IFRS 9 'Financial Instruments' provide information that is useful to users of financial statements; whether there are requirements that are difficult to implement and may prevent the consistent implementation of the standard; and whether unexpected costs have arisen in connection with applying or enforcing the standard.

We support the efforts of the Board believe the classification and measurement requirements of IFRS 9 have generally worked well and as intended, leading to useful information for users of financial statements about the amount, timing and uncertainty of future cash flows. However, we believe there are areas that could be amended to improve the usefulness of information that arises from applying the Standard and to make the Standard more relevant given changes in lending activity that have developed since the classification and measurement requirements were finalised in 2014.

Please click to download our full comment letter.

Updated IASB work plan — Analysis (January 2022)

28 Jan 2022

Following the IASB's January 2022 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 December 2021.

Below is an analysis of all changes made to the work plan since our last analysis on 17 December 2021.

Stan­dard-set­ting projects

  • Management Commentary — Discussion on the feedback from the exposure draft is expected in March 2022 (previously Q1 2022).

Main­te­nance projects

  • Lack of Exchangeability (Amendments to IAS 21) — Decision on the direction of the project is expected in Q2 2022.
  • Non-current Liabilities with Convenants (Amendments to IAS 1) — Discussion on the feedback from the exposure draft is now expected in Q2 2022 (previously H1 2022).
  • Provisions — Targeted Improvements — Decision on the project’s direction is now expected in February 2022.
  • Supplier Finance Arrange­ments — Feedback on the exposure draft is expected in Q2 2022 (previously H1 2022).

Research projects

  • Business Com­bi­na­tions under Common Control — The direction of the project phase is the current milestone; no expected date is given.
  • Equity Method — Decision of the direction of the project is expected in March 2022 (pre­vi­ously Q1 2022).
  • Post-implementation Review of IFRS 10, IFRS 11 and IFRS 12 —Feedback statement is now expected in Q2 2022 (previously H1 2022).
  • Post-implementation Review of IFRS 9 — Classification and Measurement —Discussion on the feedback to the request for information is now expected in March 2022 (pre­vi­ously H1 2022).

Other projects

  • IFRS Taxonomy Update — 2021 Tech­nol­ogy UpdateFeedback on proposed update is expected in March 2022 (previously Q1 2022).
  • IFRS Taxonomy Update — Initial Ap­pli­ca­tion of IFRS 17 and IFRS 9 — Com­par­a­tive In­for­ma­tion — IFRS Taxonomy Update is now expected in March 2022.
  • Research Programme — Project has been added to the work plan; it is not a project in its own right, but rather offers an overview of all meetings where the Board was updated on the status of the research programme.

The above is a faithful com­par­i­son of the IASB work plan at 17 December 2021 and 28 January 2022. For access to the current IASB work plan at any time, please click here.

January 2022 IASB meeting notes posted

28 Jan 2022

The IASB met in London on Tuesday 25 January 2022. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed:

Maintenance and Consistent Application

In April 2021, the IASB published ED/2021/4 Lack of Exchangeability, which proposed to amend IAS 21. The comment period ended in September 2021. The purpose of this paper was to provide the IASB with a summary of feedback on the ED. There was general support for the proposals, with some suggestions. The IASB was not asked to make any decisions at this meeting.

No comments were made by IASB members about the most recent meeting of the IFRS Interpretations Committee.

Business Combinations under Common Control

The IASB published its Discussion Paper (DP) Business Combinations under Common Control (BCUCC) in November 2020. At this meeting the staff presented detailed summaries of feedback on the remaining topics from the DP: how to apply each measurement method (being the acquisition method and the book-value method) and disclosure. The feedback was very mixed. The IASB did not object to the plan for deliberating the preliminary views in the DP.

Board work plan update

The staff gave the IASB an overview of its technical projects to support decisions about whether to add or remove projects, as may be discussed in individual project papers and an assessment of overall progress on the work plan, including project prioritisation and timing. The paper set out projects completed since the last update, listed the projects out for consultation and noted that no documents are expected to be published for consultation within approximately the next six months. (Note: this conclusion relates only to the IASB. We expect the new ISSB will publish consultation documents in the next six months). There was no discussion of this paper.

Approach to prioritising matters arising from post-implementation reviews

The staff have developed proposals to provide a more consistent approach to prioritising matters arising from post-implementation reviews (PIRs). The IASB supported the recommendations, which consider the nature of the evidence collected, what factors should lead to further action and how to prioritise projects.

Feedback on IFRS Taxonomy 2021—Proposed Update

The staff gave an oral update on responses to PTU/2021/3 IFRS Taxonomy 2021—Proposed Update 3—Initial Application of IFRS 17 and IFRS 9—Comparative Information (Amendment to IFRS 17). Only two comment letters were received and the staff expect to finalise the update in March.

Primary Financial Statements

The IASB decided to confirm the requirement for an entity to: disclose a description of why an MPM communicates management’s view of performance, including an explanation of how the MPM is calculated and how the measure provides useful information about the entity’s performance; disclose a reconciliation between an MPM and the most directly comparable subtotal or total specified in the Standards; add a requirement for an entity to disclose, for each item reconciling an MPM to the most directly comparable subtotal or total specified by IFRS Standards, the amount(s) related to each line item(s) in the statement(s) of financial performance. The IASB decided not to specify that one way to meet this requirement is to use a side-by-side columnar format for the reconciliation, but will provide an illustrative example using side-by-side disclosure.

The staff had recommended the IASB retain the proposed requirements to disclose the income tax effects and the effect on NCI for each item disclosed in a reconciliation between an MPM and the most directly comparable IFRS specified subtotal or total and how the entity determined the income tax effect. The IASB decided not to vote on this paper before further research has been conducted by the staff.

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

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