The agenda items for discussion are as follows: 

• IFRS 17: CSM Allocation for Annuities
• IFRS 17: ECA, Feedback Statement and draft Due Process Compliance Statement
• Research Project: Subsequent Measurement of Goodwill – Update 
• ISSB Exposure draft PIP
• Items for Noting

The meeting agenda and papers and details of how to register are available on the UKEB website. 

The meeting recording can be found on the UKEB website here and the meeting summary can be found on the FRC website here.  

The proposal, as recommended by the Kingman review and the Department for Business, Energy and Industrial Strategy (BEIS) White Paper, will bolster the FRC's regulatory toolkit and give the FRC powers to make make timely interventions and ensure audit firms are run in a manner that enhances audit quality.

Currently, the FRC has insufficient powers to address systemic issues at the firms and must rely on the registration powers of the RSBs. By directly registering audit firms and individuals signing PIE audit reports, the FRC will be able to act decisively when it identifies systemic issues in audit. The FRC will be able to impose conditions, suspensions and remove registration where required. The FRC will work closely with the RSBs and other stakeholders to implement the new registration process.
 
The consultation is open until 26 May 2022.  A press release and the consultation are available on the FRC website.

The Board will discuss the following:

• Post-implementation review of IFRS 9
• Third agenda consultation
• Main­te­nance and con­sis­tent ap­pli­ca­tion
• Goodwill and im­pair­ment
• Primary financial state­ments
• Second comprehensive review of the IFRS for SMEs
• Equity method
• Disclosure initiative — Subsidiaries without public accountability: Disclosures
• Management commentary

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.

The adopted amendments include three Annual Improvements (from the IASB’s Annual Improvements to IFRS Standards 2018–2020) and three Narrow-Scope Amendments, as follows:

• Three amendments from Annual Improvements to IFRS Standards 2018–2020:
  • Amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards—Subsidiary as a First-time Adopter.
  • Amendment to IFRS 9 Financial Instruments—Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities.
  • Amendment to IAS 41 Agriculture—Taxation in Fair Value Measurements.
• Onerous Contracts—Cost of Fulfilling a Contract (Amendments to IAS 37).
• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16).
• Reference to the Conceptual Framework (Amendments to IFRS 3).

These amendments are effective for annual periods beginning on or after 1 January 2022, with early application permitted.

The press release and updated adoption status report are available on the UKEB website.

The new Code, which was the subject of consultation in August 2021:

• separates the roles of the board chair and senior partner/chief executive;
• clarifies the role played by partnership boards in holding management to account;
• introduces criteria for board composition, reinforcing the position of independent non-executives within audit firms;
• sets out a clearer distinction between the role of Independent Non-Executives (INEs) and Audit Non-Executives (ANEs) for the largest audit firms; and
• more closely aligns with the UK Corporate Governance Code, emphasising the importance of long-term sustainability, culture and employee engagement. 

The press release, new Code, and feedback statement to the consultation are available on the FRC website.

The webinar, hosted by ISSB Vice-Chair Sue Lloyd, will offer an overview of ED/2022/S1 General Requirements for Disclosure of Sustainability-Related Financial Information and ED/2022/S2 Climate-related Disclosures and will provide the opportunity to ask questions.

For the convenience of stakeholders in different time zones, there will be two sessions of the webinar, one a t 9:00 BST and one at 17:00 BST.

Registration for the webinar is now open on the website of the IFRS Foundation.

Following its emergency consultation in February on exploratory proposals for changing the Code of Practice on Local Authority Accounting in the United Kingdom ("the Code"), CIPFA LASAAC issued its preliminary decision and feedback statement in March.  The government’s Financial Reporting Advisory Board (FRAB) subsequently considered the preliminary decision and advised CIPFA LASAAC that it agreed with the deferral of IFRS 16 Leases until 1 April 2024.

As a result, the implementation of IFRS 16 will be deferred until 1 April 2024 (and therefore in the 2024/25 Code).  However local authorities are encouraged to adopt the standard before this date should they wish to and this is permitted in the 2022/23 and 2023/24 Code which will allow for early adoption as of 1 April 2022 or 2023.

The updated statement on the deferral of IFRS 16 for Local Authorities is available on the CIPFA website.

We agree with the IFRS Interpretations Committee’s decision not to add this item onto its agenda.

We agree that an entity subject to the scheme described in the TAD that has produced or imported vehicles with average fuel emissions higher than the government target has a legal obligation that meets the definition of a liability in IAS 37, if it has no realistic alternative to settling that obligation.

However, we are concerned with the indication in the TAD that “an entity does not have a legal obligation that meets the definition of a liability in IAS 37, because accepting sanctions is a realistic alternative for that entity, meaning that the obligation cannot be enforced by law”. The fact pattern presented in the TAD is insufficiently clear on the nature of the sanctions to conclude whether accepting the sanctions means that the obligation cannot be enforced by law. Further, the term “sanction” can have different meaning in different jurisdictions and, depending on facts and circumstances, sanctions may represent an alternative means of imposing a penalty upon an entity as part of the enforcement of the law. Accordingly, we believe that the TAD should avoid implying that an obligation cannot be enforced by law whenever accepting sanctions is a realistic alternative for an entity. Instead, we suggest that the TAD should highlight that if accepting sanctions represents a realistic alternative, an entity would consider whether this realistic alternative indicates that the obligation cannot be enforced by law, such that the entity does not have a legal obligation (in which case, as indicated in the TAD, the entity would assess whether it has a constructive obligation), or whether accepting the sanctions represents a lower cost of settling the entity’s existing legal obligation, such that the alternative affects the measurement of the legal obligation.

We note that the Committee’s conclusion indicates that “the activity that may give rise to an obligation…is the production or import of vehicles” and that when “an entity has produced or imported vehicles with average fuel emissions higher than the government target by the end of the reporting period, that obligation has arisen from past events”[emphasis added] whereas the fact pattern refers to the fact that the government’s measures are based on the calendar year. These sentences may be read to indicate that the entity would recognise the provision, if any, over time rather than at a point in time. We do not believe that the fact pattern presented is sufficiently detailed to allow such a conclusion to be reached. Accordingly, we suggest that the reference to “end of the reporting period” should be changed to “end of the calendar year” and that a separate sentence be added to indicate that the entity would assess whether the obligation arises progressively or at a point in time considering the specific terms of the scheme.

Please click to download our full comment letter.

Comment letters on tentative agenda decision

IFRS 15 Revenue from Contracts with Customers—Principal versus Agent: Software Reseller: In its November 2021 meeting, the Committee issued a tentative agenda decision on whether a reseller of software licences is a principal or agent in respect of the standard software licences provided to the customer. Most respondents agreed with the Committee's analysis and conclusions but provided comments on various aspects of the tentative agenda decision. The staff recommend finalising the agenda decision with some changes to the drafting.

Administrative matters

Work in progress: The following new matters have not yet been presented to the Committee:

• Consolidation of a non-hyperinflationary subsidiary by a hyperinflationary parent (IAS 29 & IAS 21)
• Group of insurance contracts that generate cash flows in a foreign currency (IFRS 17 & IAS 21)

The full agenda for the meeting and our com­pre­hen­sive pre-meet­ing summaries can be found here.

The revisions of ISA (UK) 600 build upon the recently revised international version of the standard, with an enhanced focus on the risk of material misstatement at the financial statement level and the need for robust communication between group and component auditors. The deadline for comments is 8 July 2022. 

The FRC will be hosting a webinar on 4 May 2022 to discuss the consultation in further detail.  Additionally the FRC will also be hosting two virtual roundtables to hear directly from stakeholders on 11 and 12 May. 

Click for:

• Press release (including details of how to register for the webinar and roundtables)
• The proposed standard
• The conforming and consequential amendments
• The invitation to comment and impact assessment