March

ISSB exposure draft of climate-related disclosures

31 Mar 2022

The Chair and Vice-Chair of the International Sustainability Standards Board (ISSB) have published the exposure draft 'Climate-related Disclosures' that builds on the TRWG prototype of the same name. The resulting standard would be the first thematic standard of the ISSB. Comments on the proposal are requested by 29 July 2022.

 

Background

In November 2021, the IFRS Foundation announced the creation of its new International Sustainability Standards Board (ISSB) tasked with developing a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs.

In order to facilitate a running start of the ISSB, a Technical Readiness Working Group (TRWG) had been created in March 2021. Concomitantly with the announcement of the formation of the ISSB, the TRWG published a Climate-related disclosures prototype.

In an additional meeting in March 2022, the Due Process Oversight Committee (DPOC) confirmed that it does not object to the ISSB Chair and Vice-Chair publishing the exposure draft Climate-Related Disclosures that builds on the TRWG prototype before the ISSB is quorate.

The proposed standard on climate related disclosures published today is accompanied by an exposure draft of a standard covering general requirements for sustainability-related disclosures.

 

Key proposals

The main proposals in ED/2022/S2 Climate-related Disclosures generally reflect the proposals in the prototype and are structured around the four TCFD pillars of governance, strategy, risk management, and metrics and targets. Some changes were made to improve specificity and clarity with some added disclosure requirements. One noticeable change regards the internationalisation of metrics that referred to specific jurisdictions. The proposals cover the following aspects of climate-related disclosures:

  • Objective: The proposed objective of the standard is to require an entity to disclose information about its exposure to climate-related risks and opportunities that would enable users of an entity’s general purpose financial reporting to assess the effects of significant climate-related risks and opportunities on the entity’s enterprise value, to understand how the entity’s use of resources support the entity’s response to significant climate-related risks and opportunities, and to evaluate the entity’s ability to adapt to significant climate-related risks and opportunities.
  • Scope: The standard would apply to climate-related risks that the entity is exposed to, including physical risks and transitional risks, and to climate-related opportunities available to the entity.
  • Governance: Under the proposed standard, an entity would disclose information that enables users of general purpose financial reporting to understand the governance processes, controls and procedures used to monitor and manage climate-related risks and opportunities. This would include information about the governance body or bodies with oversight of climate-related risks and opportunities, and a description of management’s role regarding climate-related risks and opportunities.
  • Strategy: An entity would disclose information that enables users of general purpose financial reporting to understand the strategy for addressing climate-related risks and opportunities. This would include information about:
    • the significant climate-related risks and opportunities that it reasonably expects could affect its business model, strategy and cash flows, its access to finance and its cost of capital,
    • the effects of them on its business model, value chain, strategy and decision-making, financial position, financial performance and cash flows, and
    • the climate resilience of its strategy to significant physical risks and significant transition risks.
  • Risk management: An entity would disclose information that enables users of general purpose financial reporting to understand how climate-related risks are identified, assessed, and managed. This would include information about:
    • the process, or processes, used to identify climate-related risks and opportunities, and climate-related risks for risk management purposes,
    • the process, or processes, used to identify, assess and prioritise climate-related opportunities;
    • the process, or processes, it uses to monitor and manage the climate-related risks, and 
    • the extent to which and how the climate-related risk identification, assessment and management process, or processes, are integrated into the entity’s overall risk management process and the entity’s overall management process.
  • Metrics and targets: An entity would disclose information that enables users of general purpose financial reporting to understand the entity’s performance in measuring, monitoring and managing climate-related risks and opportunities. This would include information about cross-industry metric categories, industry-based metrics other metrics used by the board or management to measure progress towards its targets, and targets set by the entity to mitigate or adapt to climate-related risks or maximise climate-related opportunities so that users of general purpose financial reporting can understand how the entity assesses its performance and its progress towards the targets it has set.

The deadline for submitting comments on these proposals is 29 July 2022.

The ISSB has also developed a survey to support stakeholders in responding to the proposals in the exposure draft as an alternative or in addition to a comment letter.

 

Transition and effective date

The standard would be applied prospectively. Comparative information would not be required to be disclosed in the first period in which an entity applies the proposed standard.

The Board intends to decide on the effective date after exposure. Earlier application would be permitted.

 

Additional information

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

The press release also notes that the ISSB's proposals will be presented in two live webinars on 28 April at 9am and 5pm BST.

In addition to publishing its first two exposure draft, the ISSB has also published a statement on its plans for building upon the SASB standards and for embedding SASB’s industry-based standards development approach into the ISSB’s standards development process. The statement discusses the industry-based approach to standards development, the inclusion of SASB standards in the exposure drafts published today, the commitment to improving the international applicability of SASB standards, the starting point for ISSB industry-based requirements, and current SASB projects. The statement also notes that the ISSB actively encourages preparers and investors to continue to provide full support for and to use the SASB Standards in this transition phase. Please click to access the full statement on the IFRS Foundation website.

In a statement on the IOSCO website, the Monitoring Board of the IFRS Foundation welcomes the publication of the two exposure drafts and notes that the Monitoring Board remains focused on supporting the development of a comprehensive global baseline of sustainability disclosure standards that can used across jurisdictions in accordance with their own legal framework, while making sure the actions of both IFRS Foundation standard-setting boards are coordinated, aligned and in the public interest.

 

ISSB exposure draft of general requirements of sustainability reporting

31 Mar 2022

The Chair and Vice-Chair of the International Sustainability Standards Board (ISSB) have published the exposure draft 'General Requirements for Disclosure of Sustainability-related Financial Information' that builds on the TRWG prototype of the same name. The deadline for submitting comments is 29 July 2022.

 

Background

In November 2021, the IFRS Foundation announced the creation of its new International Sustainability Standards Board (ISSB) tasked with developing a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs.

In order to facilitate a running start of the ISSB, a Technical Readiness Working Group (TRWG) had been created in March 2021. Concomitantly with the announcement of the formation of the ISSB, the TRWG published a General requirements for disclosure of sustainability-related financial information prototype.

In an additional meeting in March 2022, the Due Process Oversight Committee (DPOC) confirmed that it does not object to the ISSB Chair and Vice-Chair publishing the exposure draft General Requirements for Disclosure of Sustainability-Related Financial Information that builds on the TRWG prototype before the ISSB is quorate.

The proposed standard on general requirements for sustainability-related disclosures published today is accompanied by an exposure draft of the ISSB's first thematic standard on climate related disclosures.

 

Key proposals

The main proposals in ED/2022/S1 General Requirements for Disclosure of Sustainability-Related Financial Information generally reflect the proposals in the prototype with some changed titles and strengthened definitions and some changes to the order of proposals. They cover the following aspects of sustainability reporting: 

  • Objective: The objective of sustainability-related financial disclosures is providing information about the significant sustainability-related risks and opportunities to which the reporting entity is exposed that is useful to primary users of general purpose financial reporting in deciding whether to provide resources to the entity. A reporting entity discloses material information about all of the significant sustainability-related risks and opportunities to which it is exposed. Materiality is assessed in the context of the information necessary for users of general purpose financial reporting to assess enterprise value.
  • Scope: A reporting entity would apply the proposed standard in preparing and disclosing sustainability-related financial information in accordance with IFRS Sustainability Disclosure Standards. The application of the standard is not restricted to entities applying IFRSs.
  • Core content: An entity would provide disclosures about governance, strategy, risk management, and metrics and targets unless another IFRS Sustainability Disclosure Standard permits or requires otherwise.
  • General features: Applying the proposed general requirements standard, an entity would disclose information that is relevant and faithfully represents what it purports to represent. Usefulness of the information provided is enhanced if the information is comparable, verifiable, timely and understandable.
  • Reporting entity: The exposure draft proposes that the reporting entity's boundary for its general purpose financial reporting is the same for its financial statements and sustainability-related financial disclosures. When currency is specified as the unit of measure, the reporting entity would use the presentation currency of its financial statements. The financial statements to which the sustainability-related financial disclosures relate must be disclosed.
  • Connected information: The disclosures provided must enable users of general purpose financial reporting to understand the connections between the different sustainability-related risks and opportunities and how these are linked to general purpose financial reporting information.
  • Fair presentation: A complete set of sustainability-related financial disclosures would present fairly the sustainability-related risks and opportunities to which the entity is exposed. A fair presentation requires the faithful representation of sustainability-related risks and opportunities in accordance with the principles set out in the proposed standard and would include additional disclosures when necessary.
  • Materiality: An entity would disclose all information on sustainability matters that is material for investors and other providers of capital in respect of a reporting entity. Sustainability-related financial information is considered material if omitting, misstating or obscuring that information could reasonably be expected to influence decisions that the primary users of general purpose financial reports make on the basis of those reports.
  • Comparative information: An entity would present comparative information regarding the previous period for all metrics reported in the current period. This might include comparative information for narrative and descriptive sustainability-related financial disclosures if relevant to an understanding of the current period’s sustainability-related financial disclosures.
  • Frequency of reporting: An entity would report its sustainability-related financial disclosures at the same time as its related financial statements and the sustainability-related financial disclosures would be for the same reporting period as the financial statements.
  • Location of information: An entity would disclose information required by IFRS Sustainability Disclosure Standards as part of its general purpose financial reporting. This can include an entity’s management commentary when management commentary forms part of an entity’s general purpose financial reporting or cross-referencing if the cross-referenced information is available to users of general purpose financial reporting on the same terms and at the same time as the general purpose financial reporting.
  • Sources of estimation and outcome uncertainty: When sustainability-related financial disclosures cannot be directly quantified and can only be estimated, the use of reasonable estimates is an essential part of preparing sustainability-related financial disclosure and does not undermine the usefulness of the information if the estimates are clearly and accurately described and explained. When sustainability-related financial disclosures incorporate financial data and assumptions, such financial data and assumptions would be consistent with the corresponding financial data and assumptions incorporated in the entity’s financial statements (to the extent possible).
  • Errors: Prior period errors are omissions from, and misstatements in, the entity’s sustainability-related financial disclosures for one or more prior periods. Unless impracticable, an entity would correct material prior period errors retrospectively in the first general purpose financial reporting authorised for issue after their discovery.
  • Statement of compliance: An entity whose sustainability-related financial disclosures comply with all of the relevant requirements of IFRS Sustainability Disclosure Standards would include an explicit and unqualified statement of compliance.

The deadline for submitting comments on these proposals is 29 July 2022.

The ISSB has also developed a survey to support stakeholders in responding to the proposals in the exposure draft as an alternative or in addition to a comment letter.

 

Transition and effective date

The standard would be applied prospectively. Comparative information would not be required to be disclosed in the first period in which an entity applies the proposed standard.

The Board intends to decide on the effective date after exposure. Earlier application would be permitted.

 

Additional information

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

The press release also notes that the ISSB's proposals will be presented in two live webinars on 28 April at 9am and 5pm BST.

In addition to publishing its first two exposure draft, the ISSB has also published a statement on its plans for building upon the SASB standards and for embedding SASB’s industry-based standards development approach into the ISSB’s standards development process. The statement discusses the industry-based approach to standards development, the inclusion of SASB standards in the exposure drafts published today, the commitment to improving the international applicability of SASB standards, the starting point for ISSB industry-based requirements, and current SASB projects. The statement also notes that the ISSB actively encourages preparers and investors to continue to provide full support for and to use the SASB Standards in this transition phase. Please click to access the full statement on the IFRS Foundation website.

In a statement on the IOSCO website, the Monitoring Board of the IFRS Foundation welcomes the publication of the two exposure drafts and notes that the Monitoring Board remains focused on supporting the development of a comprehensive global baseline of sustainability disclosure standards that can used across jurisdictions in accordance with their own legal framework, while making sure the actions of both IFRS Foundation standard-setting boards are coordinated, aligned and in the public interest.

ESMA publishes report on the activities of accounting enforcers and their findings within the EU in 2021

31 Mar 2022

The report provides an overview of the activities of the European Securities and Markets Authority (ESMA) and the accounting enforcers in the European Union (EU) when examining compliance of financial information provided by issuers listed on regulated markets with the applicable financial reporting framework in 2021.

European enforcers examined the financial statements of 711 issuers representing an average examination rate of 17% of all IFRS issuers with securities listed on regulated markets. These examinations resulted in 250 actions taken to address material departures from IFRS.

Enforcers also assessed the non-financial information for 711 issuers, covering approximately 36% of the total estimated number of issuers required to publish a non-financial statement, resulting in 72 enforcement measures.

In addition, 537 management reports were reviewed for evaluating compliance with ESMA’s guidelines on alternative performance measures, covering around 13% of all IFRS listed issuers in Europe against which were taken 97 corrective actions.

Please click to access the full report on the ESMA website.

UKEB to undertake intangibles research project

31 Mar 2022

The UK Endorsement Board (UKEB) is undertaking a comprehensive research project to consider how the accounting for, and reporting of, intangible assets could be improved to provide investors with more useful general purpose financial statements to assist them to make better informed decisions.

As part of the first phase of this project, the UKEB will interview UK stakeholders about their views on the accounting for intangibles during April and May of 2022.

The press release, details of the project, and contact details to share views are available on the UKEB website.

UKEB publishes its final comment letter on supplier finance arrangements

31 Mar 2022

The UK Endorsement Board (UKEB) has published its final comment letter and feedback statement 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:

  • the the IASB clarifies the intended scope of the ED, perhaps by way of application guidance, to facilitate consistent application. 
  • that specific requirements be added to enable users to understand the magnitude of an entity's supplier finance arrangements and their effect on reported cash flows.  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 disclosure objective in IAS 7 Statement of Cash Flows is expanded to encompass the effects of supplier finance arrangements on an entity’s liquidity risk
  • that the proposed amendment in paragraph IG18 of IFRS 7 Financial Instruments: Disclosures, 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.

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

EFRAG publishes due process procedures for its SRB

30 Mar 2022

The European Financial Reporting Advisory Group (EFRAG) has published a description of the minimum steps to be taken by the EFRAG Sustainability Reporting Board, (SRB) in developing the European Sustainability Reporting Standards (ESRS). The summary also identifies additional non-mandatory steps to be considered for each project.

The description of the due process to be followed discusses the objective of SRB standard-setting, the principles to be followed, the due process oversight, agenda-setting, and standard-setting. It stresses transparency (all meetings to be held in public, though closed sessions are possible at the discretion of the SRB Chair, and all papers to be discussed to be provided publicly at least five days before a meeting, although again with caveats) and a robust public consultation process with a minimum comment period of 120 days (which may be shortened to no less than 60 days in case of an accelerated process).

Please click to access the full due process description on the EFRAG website.

UKEB publishes its final comment letter on the classification of debt with covenants

29 Mar 2022

The UK Endorsement Board (UKEB) has issued its final comment letter on the International Accounting Standard Board's (IASB's) Exposure Draft ED/2021/9 'Non-current Liabilities with Covenants (Proposed Amendments to IAS 1)'.

The IASB published the exposure draft 'Non-current Liabilities with Covenants (Proposed amendments to IAS 1)' in November 2021 to clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability.

The UKEB final comment letter has been informed from in-house research and stakeholder feedback.  The UKEB supports a number of the proposals in the ED however it has the following concerns:

  • It does not support the specific requirement for separate presentation in the Statement of Financial Position (paragraph 76ZA(a)) as it believes that the current general requirements in IAS 1 Presentation of Financial Statements are sufficient.
  • The potential for unintended consequences of some elements of the ED’s proposals. These include (but are not limited to):
    • The meaning of “specified conditions” (paragraph 72B).  The UKEB indicates that if the term is meant to have a particular meaning it should be defined, otherwise it suggests “conditions” should be used.
    • The application of paragraph 72C(b) when determining if a liability is current.  The UKEB has encountered significant diversity in interpreting the intent of this paragraph and suggests that paragraph 72C is deleted.

To enable timely completion of the project, the UKEB suggests that the IASB only proceed with amending paragraphs 72A, 72B (with specific clarifications as indicated in the comment letter) and enhancing disclosure on conditions that could be breached leading to earlier repayment of non-current liabilities.  The UKEB suggests that further standard setting should happen only if there is evidence of significant diversity in practice.

The final comment letter and the feedback statement are available on at UKEB website. 

March 2022 IASB meeting notes posted

28 Mar 2022

The IASB met in London over three days, from Tuesday 22 to Thursday 24 March 2022. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed:

Business Combinations under Common Control

The IASB published a Discussion Paper in November 2020. In this session, the IASB discussed 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 IASB decided that the project objective be 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. The Chair posed an additional question, asking whether they supported expanding the project to consider transfers of interests in associates and joint ventures under common control. Only 2 of the 11 IASB members voted in favour of that proposal.

Management Commentary

In May 2021, the IASB published proposals for a revised Practice Statement (PS) on Management Commentary. The IASB considered a summary of the feedback received. The staff concluded 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 IIRC’s IR Framework as the basis for such reporting. IASB members welcomed the generally positive responses. No decisions were asked from the IASB on the agenda papers.

Extractive Activities

The staff set out a plan for improving the disclosure objectives and requirements about exploration and evaluation expenditure and removing the temporary status of IFRS 6. The staff expect to bring papers back to the IASB in July.

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. No decisions were made.

Primary Financial Statements

The IASB considered 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 IASB decided to provide additional guidance. That guidance is set out in the paper. IASB also confirmed 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 recommended 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. The IASB decided that the vote should only be on whether the seven projects mentioned provide a good basis of the shortlist. All IASB members agreed with that. A vote on individual projects will be held in April.

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). No IASB members objected to the agenda decision.

Post-implementation Review (PIR) of IFRS 9

The staff concluded 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 deliberated 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. The IASB supported all of the staff recommendations.

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

Updated IASB work plan — Analysis (March 2022)

28 Mar 2022

Following the IASB's March 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 February 2022. Changes are few.

Below is an analysis of all changes made to the work plan since our last analysis on 28 February 2022.

Standard-setting projects

  • No changes

Maintenance projects

  • No changes

Research projects

  • Dynamic risk management — A decision on the direction of the project is expected in May 2022 (previously Q2 2022)
  • Equity method of accounting — A decision on the direction of the project was expected in March 2022, however, the project was not discussed during the meeting and the date entry has been removed
  • Post implementation review of IFRS 9 — The feedback on the request for information was discussed during the March IASB meeting; the publication of a feedback statement is expected in Q2 2022

Other projects

  • IFRS Taxonomy Update — 2021 Technology Update — the final Update was integrated into the IFRS Taxonomy 2022 released in March 2022
  • IFRS Taxonomy Update — Initial Application of IFRS 17 and IFRS 9 — the final Update was integrated into the IFRS Taxonomy 2022 released in March 2022

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

Deloitte comments on IASB’s proposed amendments to IAS 7 and IFRS 7 regarding supplier finance arrangements

28 Mar 2022

We have commented on the 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.

We support the Board’s initiative to improve the disclosures an entity provides about supplier financing arrangements. 

We agree with the approach taken by the Board to identify the scope of the arrangements for which additional information should be provided by describing the characteristics of these arrangements. As further explained in our detailed response, we suggest that some changes to the proposed characteristics may be required to ensure that relevant supplier finance arrangements are appropriately identified. It would also be useful if the Board clarified that arrangements such as credit card arrangements and other similar trade line of credit arrangements and financial guarantee contracts may also provide a means for an entity to finance amounts owed to their suppliers and that when this is the case, entities are required to provide the relevant disclosures.

We agree with the proposed disclosure objective and believe that, in general, the proposed required disclosure would help to achieve this objective. However, we do not support the proposal that an entity that enters into supplier finance arrangements should disclose the carrying amount of financial liabilities for which the suppliers have already been paid by finance providers. As noted in the ED, an entity would need to obtain this information from the finance provider(s) and as such we are concerned about the entity’s ability to obtain and verify this information that would not be subject to the entity’s internal controls. We also question whether the disclosure would necessarily provide relevant information about the situation of the entity.

Separately from the finalisation of this project, and consistent with our response to the Board’s recent agenda consultation, we suggest that the Board takes on a medium-sized targeted project to improve certain aspects of IAS 7, which would include, among others, the presentation of the effect of supplier finance arrangements on an entity’s statement of cash flows.

Please click to download our full comment letter.

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