During the earlier stages of the COVID-19 pandemic, the Financial Conduct Authority (FCA) (for companies subject to Disclosure Guidance and Transparency Rule (DTR) 4) and the London Stock Exchange (as the regulator of the Alternative Investment Market (AIM)) announced temporary extensions for deadlines for annual and half-yearly financial reports. Both have announced that these temporary extensions will come to an end for annual or half-yearly reporting periods ending on or after 28 June 2022.  Deadlines will revert to:

• DTR 4 companies (Main market of the LSE other than wholesale debt) - publishing of the annual financial report within four months of the financial year-end.  Issuers subject to DTR 4.2 must publish their half-yearly financial reports within three months of the end of the relevant reporting period.  
• AIM companies will be required to publish their annual audited accounts within six months of the financial year-end date and will be required to publish half-yearly financial reports within three months.

Companies missing these deadlines will have their securities suspended from trading.  The six month deadline for annual reports of wholesale debt issuers (Listing Rule (LR) 17) was never extended – such companies not having to file half-yearly reports; the AQSE Growth Market removed their automatic extension in August 2021.

Please click for:

• FCA Primary Market Bulletin 39 (link to FCA website)
• Inside AIM (link to London Stock Exchange website).

After publication of six working papers in Batch 1, three working papers in Batch 2, one working paper in Batch 3, seven working papers in Batch 4, two working papers in Batch 5, and one working paper and one cover note in Batch 6, Batch 7 consists of only one paper (link to the EFRAG website):

• ​ESRS G2 Products and services, management and quality of relationships with business partners

ESRS G2 is the last of the working papers in the "Governance" pillar of the intended structure of the EFRAG sustainability standards, ESRS G1 Governance, risk management and internal control and ESRS G3 Business conduct were published as part of Batch 5.

The 2022 IFRS Accounting Taxonomy is con­sis­tent with IFRSs as issued by the IASB at 1 January 2022, including those issued but not yet effective. The 2022 IFRS Taxonomy also in­cor­po­rates the three changes made to the IFRS Taxonomy in 2021 re­flect­ing amended IFRSs and changes to the IFRS Accounting Taxonomy’s technology.

For more in­for­ma­tion, see the press release and the 2022 IFRS Accounting Taxonomy page  on the IASB's website.

By working together, the IFRS Foundation and GRI will cover two aspects of international sustainability reporting — investor-focused capital market standards set by ISSB and multi-stakeholder-focused sustainability reporting requirements set by the GSSB. The press release stresses the importance of compatibility:

The agreement [...] represents the latest development in efforts to consolidate or align multiple international initiatives covering sustainability reporting into a more cohesive approach for the benefit of companies, investors and society at large.

Please click to access the full press release on the IFRS Foundation website.

The survey aims to collect information on the effects of the new guidance, as well as on how the implementation requirements of new IFRSss impact the internal production and use of information. The views of both preparers and users of financial statements will inform EFRAG's work related to the IASB's forthcoming post-implementation review of IFRS 15 and assist EFRAG in better estimating the net costs of IFRS adoption in general.

Please click for more information on the EFRAG website.

Day 1 of the conference will feature:

• speeches by Chair of the IFRS Foundation Trustees and the ISSB Chair;
• an introduction to the structure and remit of the ISSB;
• a discussion on digital reporting and the effect of technology on the investment process; and
• breakout sessions on the ISSB’s forthcoming consultations.

Day 2 will feature:

• a speech by the IASB Chair;
• an update on the work of the IASB and the IFRS Interpretations Committee;
• breakout sessions on aspects of the IASB’s work; and
• an interactive Q&A session with leaders from the IASB.

Please click for more information on the conference page on the IFRS Foundation website.

Items for initial consideration

IFRS 17 Insurance Contracts—Quantity of the Benefits Provided under a Group of Annuity Contracts: The Committee received a submission about how to identify, applying IFRS 17:B119(a), the quantity of benefits provided under a group of immediate annuity contracts. The staff concluded that in determining the quantity of benefits provided in each period an entity applies the constant annual benefit approach. Under that approach, the benefits are determined using the claim amount payable for the period. Most of the Committee members agreed with the staff's analysis. The Committee will publish a tentative agenda decision based on the analysis.

IFRS 9 Financial Instruments and IFRS 16 Leases—Rent Concessions: Lessors and Lessees: The Committee received a submission about the application of IFRS 9 and IFRS 16 by both a lessor and a lessee in accounting for a particular rent concession. The staff concluded that the lessor estimates the expected credit losses (ECL) on the operating lease receivable by taking into account its expectations of forgiving lease payments. The lessor also applies both the derecognition requirements in IFRS 9 and lease modification requirements in IFRS 16 for the rent concession granted. The Committee decided to publish a tentative agenda decision to that effect. In addition, for the lessee accounting on the forgiven lease payments, the Committee decided a standard-setting project (annual improvement) given the possible alternative interpretations of the principles and requirements in IFRS 16 is necessary.

IAS 32 Financial Instruments: Presentation—Special Purpose Acquisition Companies (SPAC): Classification of Public Shares as Financial Liabilities or Equity: The Committee received a submission asking whether a SPAC classifies public shares it issues as financial liabilities or equity instruments applying IAS 32. The staff concluded that the matter is too narrow for the Committee to consider in isolation and is better suited to be addressed as part of the IASB’s Financial Instruments with Characteristics of Equity (FICE) project. All Committee members agreed with this.

Special Purpose Acquisition Companies (SPAC): Accounting for Warrants at Acquisition: The Committee received a submission about how an entity accounts for warrants on acquiring a SPAC. The staff analysed the accounting treatment step by step and concluded that IFRS 2 is applied in accounting for instruments issued to acquire the stock exchange listing service and IAS 32 is applied in accounting for instruments issued to acquire cash and assume any liabilities related to the SPAC warrants. The Committee decided to publish a tentative agenda decision to that effect, but preferred not adding the analysis of a variation (the reverse acquisition) to the tentative agenda decision.

Comment letters on tentative agenda decision

IAS 7 Statement of Cash Flows—Demand Deposits with Restrictions on Use: In September 2021, the Committee published a tentative agenda decision on whether an entity includes demand deposits with restrictions on use as a component of cash and cash equivalents. Most respondents to the tentative agenda decision agreed (or did not disagree) with the technical analysis and conclusions but raised some concerns. The Committee decided to finalise the agenda decision.

Administrative matters

Work in progress: The following new matter has not yet been presented to the Committee: Lease payments linked to cadastral value (IFRS 16).

More In­for­ma­tion

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

The proposal would require “registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements.”

In the proposing release, the SEC noted that the disclosures registrants would be required to provide are similar to those that many companies provide under existing disclosure frameworks and standards, such as the Financial Stability Board's Task Force on Climate-Related Financial Disclosures (TCFD) and the Greenhouse Gas Protocol.

For more information, see the following:

• Deloitte's Heads Up — SEC proposes rule on climate disclosure requirements
• Press release and fact sheet, as well as statements by SEC Chair Gary Gensler and Commissioners Allison H. Lee, Hester M. Peirce, and Caroline A. Crenshaw, on the SEC’s website.
• Statements by TCFD Chair Michael Bloomberg and Vice Chair for Public Policy Mary Schapiro on the TCFD website.
• IFAC statement welcoming the proposal und stressing the importance of international alignment on the IFAC website.

The preliminary decisions were as follows:

• The Board decided not to progress any option to pause professional valuation of operational property, plant and equipment, or to apply indexation to otherwise paused balances of operational property, plant and equipment.
• The Board decided to pursue the option of deferring implementation of IFRS 16 Leases, subject to consideration and review of this approach by the Financial Reporting Advisory Board (FRAB). This deferral would be for a fixed period of two years and apply to all UK jurisdictions.

The outcome of these considerations is not a foregone conclusion. Preparers should therefore not suspend work on IFRS 16 implementation in anticipation of deferral. It is anticipated that the final decision will be available in the first week of April.

The preliminary decision and feedback statement is available on the CIPFA website.

The following topics are on the agenda:

Business Combinations under Common Control

The IASB published a Discussion Paper in November 2020. In this session, the IASB will discuss feedback received on the overall project objective and respondents’ suggestions to expand the scope of the project to address reporting by entities involved in a BCUCC other than the receiving entity, reporting of an investment in a subsidiary received under common control in separate financial statements and reporting of common control transactions other than BCUCCs. The staff recommend that the project objective is updated to reflect the stage of the project and to emphasise that the project considers users of the receiving entity’s financial statements and that the project scope not be extended to address these other topics.

Management Commentary

In May 2021, the IASB published proposals for a revised Practice Statement (PS) on Management Commentary. The IASB will consider a summary of the feedback received. The staff conclude that many respondents, including almost all investors, support the project. Many respondents highlighted the importance of management commentary in corporate reporting and the need for guidance in this area to remain current. Some respondents highlighted that the proposals reflect investors information needs, provide well-structured preparation guidance, could help improve connectivity between ‘financial’ and ‘non-financial’ information, and build on the recent developments in narrative reporting, such as the Integrated Reporting (IR) Framework, and the Recommendations of the Task Force on Climate Related Financial Disclosures (TCFD recommendations). A few respondents disagreed with the focus on investor needs, and instead argued that providing a PS in this area would be outside the remit of the IASB, preferring to use the IR Framework as the basis for such reporting. No decisions will be asked from the IASB on the agenda papers.

Extractive Activities

The staff will set out a plan for improving the disclosure objectives and requirements about exploration and evaluation expenditure and removing the temporary status of IFRS 6.

Financial Instruments with Characteristics of Equity

IAS 32 has no general requirements on reclassification between financial liabilities and equity instruments. It is unclear whether IAS 32 requires an entity to reassess the classification of a financial instrument after initial recognition when a contract is modified. The IASB could consider either requiring or prohibiting reassessment (unless IAS 32 specifically requires it). If the IASB decides to prohibit reclassification for changes in the substance of the contractual terms without a modification to the contract, it could consider requiring entities to still disclose information about the effects of such changes on the nature of the obligation. If the IASB decides to require reclassification for changes in the substance of the contractual terms with a modification to the contract, further consideration would be needed in relation to the timing, measurement and disclosure of the reclassification.

Primary Financial Statements

The IASB will consider classification for entities that invest in the course of main business activities in assets that generate a return individually and largely independently of other resources held by the entity. The staff recommend that the IASB provide additional guidance. That guidance is set out in the paper. The staff also recommend the IASB confirm the requirement for an entity to disclose information about MPMs in a single note to the financial statements and not add specific requirements relating to including the MPMs disclosures in the financial statements by reference to another document.

Third Agenda Consultation

The staff estimate that in the period from 2022 to 2026, the IASB will be able to add to its work plan 2 large projects, 3–4 medium-sized projects or 4–5 small projects. They recommend that the IASB short-list seven projects for further discussion: climate-related risks; cryptocurrencies and related transactions; going concern disclosures; intangible assets; operating segments; pollutant pricing mechanisms; and statement of cash flows and related matters.

Maintenance and consistent application

At its February 2022 meeting, the IFRS Interpretations Committee decided to finalise an agenda decision in response to a submission about accounting for the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTRO). IASB members will be asked if they object to the agenda decision.

Post-implementation Review (PIR) of IFRS 9

The staff conclude that, overall, the PIR feedback is positive. The staff set out a plan for the second phase of the review. The topics to be discussed are: contractual cash flow characteristics (including financial assets with sustainability-linked features and contractually linked instruments) in April–May; business model assessment in Q2/Q3; equity instruments and OCI in Q2/Q3; modifications to contractual cash flows and amortised cost and the effective interest method in Q2/Q3; and other matters in Q3. The IASB plans to start the PIR of the impairment requirements in the second half of 2022.

Second Comprehensive Review of the IFRS for SMEs Standard

At this meeting the IASB will deliberate the approach to develop proposals to update the disclosure requirements in the IFRS for SMEs Standard to align with IFRS Accounting Standards and the alignment of the IFRS for SMEs Standard with the requirements for financial guarantee contracts in IFRS 9. 

Our pre-meet­ing summaries is available on our March meeting notes page and will be sup­ple­mented with our popular meeting notes after the meeting.