In its response to the proposed rule, Accountancy Europe welcomes the SEC's efforts and notes that there it fully supports mainstreaming environmental, social and governance (ESG) topics in corporate reporting. However, as Accountancy Europe points out, there are other parallel initiatives aiming to streamline sustainability reporting standards, in particular those of:

• the International Sustainability Standards Board (ISSB) with its initial exposure drafts on sustainability-related financial information and climate-related disclosures, and
• the European Union (EU), via the European Financial Reporting Advisory Group (EFRAG), with its European Sustainability Reporting Standards (ESRS) exposure drafts.

Accountancy Europe stresses that there needs to be a high degree of coordination and alignment, including of language and definitions, for all of these initiatives to be meaningful and fit-for-purpose for global markets.

Also, Accountancy Europe especially responds to a specific SEC question regarding whether alternative reporting requirements (for example ISSB requirements) should be permitted for use in the US and whether such a provision should be limited to foreign private issuers or available to all registrants. Accountancy Europe clearly supports an alternative reporting provision for foreign private issuers and advocates extending it to all registrants. The comment letter notes that this would entail a significant step towards achieving a global reporting framework on sustainability and climate-related information.

Please click to access the full letter on the Accountancy Europe website.

The IPTF's discussion document for the 25 May 2022 meeting is now available and states the following view of the Task Force:

Countries with three-year cumulative inflation rates exceeding 100%:

• Argentina
• Ethiopia
• Iran
• Lebanon
• South Sudan
• Sudan
• Suriname
• Turkey
• Venezuela
• Yemen
• Zimbabwe

Countries with projected three-year cumulative inflation rates exceeding 100%:

There are no countries in this category for this period.

Countries where the three-year cumulative inflation rates had exceeded 100% in recent years:

There are no countries in this category for this period.

Countries with recent three-year cumulative inflation rates exceeding 100% after a spike in inflation in a discrete period:

There are no countries in this category for this period.

Countries with projected three-year cumulative inflation rates between 70% and 100% or with a significant (25% or more) increase in inflation during the current period

• Angola
• Haiti

The IPTF also notes that there may be additional countries with three-year cumulative inflation rates exceeding 100% or that should be monitored which are not included in the analysis as the necessary data is not available. Examples cited are Afghanistan, Syria, and Ukraine.

The full list, including exact numbers, detailed explanations of the calculation of the numbers, and observations of the Task Force is available on the CAQ website.

The DPOC discussed:

• IASB Third Agenda Consultation — The DPOC were updated on the consultation process, feedback from stakeholders, IASB’s deliberations, and final decisions.
• Review of the Post-implementation Review (PIR) of IFRSs 10, 11 and 12 — The DPOC were updated on the PIRs’ objectives, process, IASB’s evaluation, and final conclusions.
• Post-implementation Reviews — Improving communications — The DPOC were updated on the work to clarify the articulation of the objective of a PIR, process and possible outcomes, and stakeholder communications.

Please click to access the full report on the IFRS Foun­da­tion website.

Discussion of

• Second comprehensive review of the IFRS for SMEs accounting standard
  • Guidance on public accountability
  • Additional simplifications to IFRS 15
  • Transition to the third edition of the IFRS for SMEs Accounting Standard
  • Due process and permission to begin the balloting process
• Disclosure initiative — Subsidiaries without public accountability: Disclosures 
  • Project direction and plan for redeliberations

will now begin at 12:00 noon.

Please see the updated agenda on the IASB website.

The event will cover the latest cross government position on sustainability reporting in the UK and will give participants the chance to hear from preparers, users and regulators on emerging challenges identified.

The details of how to register the event are available on the UKEB website.  A recording of the event is available on the UKEB website here.

The agenda items for discussion are as follows:

• Endorsement of 2021 NSA - Approval of Draft Endorsement Criteria Assessment
• Ongoing Monitoring of IASB Projects
• Goodwill Research – project progress and Updated PIP
• Items for Noting

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

The recording of the meeting is available on the UKEB website.

The objectives of a post-implementation review, according to the IASB's Due Process Handbook, are:

• to review the important issues that had been identified as contentious during the development of the pronouncement
• to consider any unexpected costs or implementation problems that have been encountered.

Although minor issues were identified during the review, none of them was considered to be of high or medium priority. The minor issued identified as low priority are:

• subsidiaries that are investment entities;
• transactions that change the relationship between an investor and an investee;
• transactions that involve ‘corporate wrappers’;
• collaborative arrangements outside the scope of IFRS 11; and
• additional disclosures about interests in other entities.

The IASB notes that these topics could be explored if they are judged to be of high priority in the next agenda consultation. The Board also encourages stakeholders to submit questions to the IFRS Interpretations Committee if they believe additional guidance is required in certain areas.

For more information, please see the press release and the final report on the IASB’s website. In addition, see our project page on the post-implementation review of IFRS 10, IFRS 11, and IFRS 12.

Items for initial consideration

IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 29 Financial Reporting in Hyperinflationary Economies—Consolidation of a Non-hyperinflationary Subsidiary by a Hyperinflationary Parent: The Committee received a submission about the accounting applied by a parent, whose functional currency is the currency of a hyperinflationary economy, when it consolidates a subsidiary whose functional currency is the currency of a non-hyperinflationary economy. The submission asked whether, in preparing its consolidated financial statements, the parent applies IAS 29 to restate the current year and comparative amounts presented for its non-hyperinflationary subsidiary in terms of the measuring unit current at the reporting date. The staff concluded that, an entity could reasonably read the applicable requirements in IAS 21 and IAS 29 to either not restate or restate the subsidiary’s results and financial position and recommend they conduct further research and outreach to obtain further information to decide whether to add a standard-setting project to the work plan. The Committee had mixed views about whether restating, not restating or an accounting policy choice was appropriate and suggested to initiate a narrow-scope project for this matter.

IFRS 17 Insurance Contracts and IAS 21 The Effects of Changes in Foreign Exchange Rates—Multi-currency Groups of Insurance Contracts: The Committee received a submission about the application of IFRS 17 and IAS 21 to a group of insurance contracts with foreign currency cash flows. The submission asked (a) whether an entity considers currency exchange rate risk when applying IFRS 17 to identify portfolios of insurance contracts; and (b) how an entity applies IAS 21 in conjunction with IFRS 17 in measuring a multi-currency group of insurance contracts. The staff concluded that currency risk is considered when identifying portfolios of insurance contracts and an entity uses its judgement in developing and applying an accounting policy for measuring a multi-currency group of insurance contracts. The Committee agreed with the technical analysis and decided not to add the matter to its standard-setting agenda but to publish a tentative agenda decision.

Comment letters on tentative agenda decisions

IFRS 9 Financial Instruments—Cash Received via Electronic Transfer as Settlement for a Financial Asset: In its September 2021 meeting, the Committee discussed a submission asking the timing of recognition of cash received via Bacs, a formal automated settlement process, as settlement for a financial asset. The submitter asked whether it is acceptable for the entity to derecognise the trade receivable and recognise the cash on the transfer initiation date, rather than the transfer settlement date. The Committee published a tentative agenda decision concluding that the trade receivable is generally derecognised on the settlement date, the date when the contractual right to the cash flows from the trade receivable expires. Also, cash should be recognised on the transfer settlement date because the entity has a right to obtain cash from the bank only when cash is deposited in its bank account. Almost all respondents agreed with the Committee's analysis and conclusions in the tentative agenda decision. The Committee decided to finalise the agenda decision and will report the concerns raised to the IASB.

IAS 37 Provisions, Contingent Liabilities and Contingent Assets—Negative low or new energy vehicle credits: In its November 2021 meeting, the Committee discussed a submission asking whether an entity with negative low emission vehicle credits has a present obligation that meets the definition of a liability in IAS 37. The Committee published a tentative agenda decision concluding that an entity that has generated negative credits has an obligation that meets the definition of a liability in IAS 37. Most respondents agreed (or did not disagree) with the Committee’s conclusions and the tentative agenda decision but commented on various aspects of the analysis. The Committee decided to finalise the agenda decision.

IAS 32 Financial Instruments: Presentation—Special Purpose Acquisition Companies (SPAC): Classification of Public Shares as Financial Liabilities or Equity: In its March 2022 meeting, the Committee discussed a submission asking whether a SPAC classifies public shares it issues as financial liabilities or equity instruments applying IAS 32. The Committee published a tentative agenda decision concluding 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 respondents agreed with the tentative agenda decision. The Committee decided to finalise the agenda decision.

IFRS 17 Insurance Contracts—Quantity of the Benefits Provided under a Group of Annuity Contracts: In its March 2022 meeting, the Committee discussed a submission about how to identify, applying IFRS 17:B119(a), the quantity of benefits provided under a group of immediate annuity contracts. The Committee published a tentative agenda decision concluding 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. While some respondents supported the technical analysis and conclusion, many respondents disagreed with aspects of the Committee’s technical analysis and conclusions in the tentative agenda decision. The Committee decided to finalise the agenda decision.

Work in progress: There were no new matters that have not been presented to the Committee.

More Information

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

While the approaches of IASB and FASB on goodwill accounting had been reasonably converged for some time, the Boards seemed to be going separate ways recently.

In July 2019, the FASB issued an invitation to comment Identifiable Intangible Assets and Subsequent Accounting for Goodwill, which noted that the FASB was considering whether to change the subsequent accounting for goodwill for cost-benefit reasons. In December 2020, during the deliberation of the responses, the FASB tentatively decided to reintroduce amortisation of goodwill (please see the decision summary on the FASB website). In fact, the agenda paper prepared for Wednesday's meeting (link to FASB website) notes among the major tentative decisions to date:

• Amortize goodwill on a straight-line basis over a 10-year default period or over an estimated period (using an open list of factors to consider), limited to a 25-year cap.
• Reassessing the amortization period would be prohibited.

The IASB has also been discussing restoring amortisation of goodwill. In December 2017, the Board decided tentatively not to reintroduce amortisation and to focus on improving the impairment model instead. Consequently, the discussion paper DP/2020/1 Business Combinations — Disclosures, Goodwill and Impairment published in March 2020 notes: "The Board reached a preliminary view that it should retain an impairment-only approach." The IASB continues to move forward with its project and the most recent agenda paper in the project (May 2022, link to IASB website) notes that in Q4 2022, the staff plans to ask the IASB whether to move the project from the research phase to the standard-setting phase. (The agenda paper was written before the FASB's decision on Wednesday.)

While views are split on whether amortisation of goodwill should be reintroduced, calls for convergence between the FASB and IASB approaches remain strong. A survey released by the CFA Institute in December 2021 revealed that a majority its members (58%) supported retaining an impairment approach (with improvements) and only 31% of the respondents supported the introduction of amortisation. At the same time, the survey noted:

Respondents were in raging agreement that the IASB and FASB should follow the same approach in the accounting for goodwill (90%) and in the subsequent measurement of goodwill (94%).

An IOSCO statement released in February 2021 also noted:

We observe that when the requirements under U.S. GAAP are as aligned as possible with those under IFRS on accounting for goodwill, there is greater comparability in financial statements prepared under IFRS and U.S. GAAP. [...] We believe that maintaining and enhancing convergence in this area should continue to be an important consideration for the IASB and FASB.

Most recently, SEC Acting Chief Accountant Paul Munter cautioned in a February 2022 statement (link to SEC website) that FASB decisions need to consider the significant diversity in views expressed by investors and other stakeholders regarding the FASB’s goodwill project, particularly regarding whether goodwill should be amortised. He wrote:

We emphasize the importance of a robust process and analysis to make the case for any changes in the accounting for goodwill, which would include, among other things, the extent to which international convergence in this area is necessary or appropriate in the public interest.

The FASB has published a short (one-sentence) statement on its decision in its summary of tentative Board decisions (link to FASB website). However, a recording of the session (approx. 30 minutes) is available on YouTube.

The following topics are on the agenda:

Primary Financial Statements

The staff recommend the IASB add a requirement that additional subtotals and line items that are presented in the statement(s) of financial performance in accordance with paragraph 42 of the ED fit into the structure of the proposed categories. The staff also recommend withdrawing the proposal to specifically prohibit columns when presenting MPMs in the statement(s) of financial performance.

Maintenance and consistent application

In November 2010, the IFRS Interpretations Committee asked the IASB to consider amending IAS 1 to clarify when a liability should be classified as current or non-current. That request led to EDs in 2012 and 2015 and an amendment in 2020. The effective date of the 2020 amendment was deferred pending further clarifications. In November 2021, the IASB published new amendments with the comment period ending in March 2022. At this meeting the staff recommend that the IASB finalise the latest amendments, although not the proposal to require an entity to present separately non-current liabilities with covenants. The staff also recommend that the IASB defer the 2020 amendments again, to align them with the effective date of these new, additional, amendments, which would be no earlier than annual reporting periods beginning on or after 1 January 2024.

Post-implementation Review of IFRS 9

The IASB will continue to consider feedback from the Request for Information (RFI) Post-implementation Review—IFRS 9 Financial Instruments—Classification and Measurement. At this meeting, the IASB will discuss feedback in relation to equity instruments and other comprehensive income.

Second Comprehensive Review of the IFRS for SMEs Standard

This is the last public decision-making meeting for this project. The staff are seeking permission to prepare the ED and are proposing a comment period of 150 days.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The staff recommend that the IASB proceed to finalise the draft Standard and that the IASB does not publish a ‘catch-up’ ED that considers amendments to (and new) IFRS Accounting Standards issued after 28 February 2021 before finalising the Standard. It the IASB agrees, the staff will develop a plan for deliberating the feedback on the ED.

Business Combinations under Common Control

In this meeting, the IASB will discuss whether some or all BCUCCs are similar to or differ from IFRS 3 business combinations (BCs). The staff recommend that assessing whether some or all BCUCCs are similar to or differ from IFRS 3 BCs and assessing the information needs of users will help the IASB tentatively decide whether conceptually the acquisition method or a book-value method should apply to some or all BCUCCs. The IASB will not be asked to make any decisions.

Equity Method

At its April 2022 meeting, the IASB discussed possible approaches to the application question and asked the staff to develop its analysis further applying its preferred approach, being that after obtaining significant influence, an investor measures its additional interests in an associate as an accumulation of purchases. The staff recommend that in applying this approach, while retaining significant influence, an investor purchasing an additional interest that is a bargain recognises the bargain purchase gain separately in profit or loss and an investor making a partial disposal determines the portion of the carrying amount of an investment in the associate to be derecognised by applying a specific identification method, if the investor can identify the specific portion of the investment being disposed of and its cost or the last-in first-out (LIFO) method.

Contractual Cash Flow Characteristics

In May 2022, the IASB decided to start a standard-setting project to clarify particular aspects of the IFRS 9 requirements for assessing a financial asset’s contractual cash flow characteristics (i.e. the ‘solely payments of principal and interest’ (SPPI) requirements). The staff will set out the proposed objective, scope and an indicative timeline for the project. The proposed objective of this project would be to make clarifying amendments to the application guidance in IFRS 9 to enable the consistent application of the SPPI requirements and to consider whether additional disclosure requirements are needed. The staff plan is for the IASB to consider potential clarifications during the second half of 2022 and publish an ED in the first quarter of 2023.

Financial Instruments with Characteristics of Equity

The IASB has been discussing feedback on the Discussion Paper (DP) published in June 2018, for which comments closed in January 2019. IAS 32 has no general requirements on reclassification between financial liabilities and equity instruments and there is diversity in practice when there are changes in the substance of the contractual terms without a modification to the contract such that reassessment would result in a different classification outcome from that initially assessed. The staff recommend that the IASB add general requirements on reclassification to IAS 32 to prohibit reclassification other than for changes in the substance of contractual terms arising from changes in circumstances outside the contract. The staff recommend accounting for a reclassification at the beginning of the first reporting period after the change in the substance of the contractual terms without a modification to the contract—on reclassification from equity to financial liability—a financial liability would be measured at fair value at the date of reclassification and any difference between the carrying amount of the equity instrument and the fair value of the financial liability would be recognised in equity; on reclassification of a financial liability to equity—an equity instrument is measured at the carrying value of the financial liability at the date of reclassification and no gain or loss is recognised. The staff also recommend additional disclosure requirements for these circumstances.

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