IASB workshop on digital financial reporting

17 Oct, 2022

On 18 November 2022, the IASB will offer a workshop that explores issues relating to digital financial reporting and digitalisation of financial reports.

The workshop will discuss:

  • what digital reporting is;
  • the IFRS Accounting Taxonomy; and
  • digital reporting and standard-setting.

Please click for more information on the IFRS Foundation website.

FSB calls for continued progress on disclosures on climate-related risks

17 Oct, 2022

The Financial Stability Board (FSB) has submitted to the G20 Finance Ministers and Central Bank Governors two reports as part of its work on addressing climate-related financial risks.

The reports are (1) a final report on supervisory and regulatory approaches to climate-related risks that aims to assist supervisory and regulatory authorities in developing their approaches to monitor, manage and mitigate cross-sectoral and system-wide risks arising from climate change and to promote consistent approaches across sectors and jurisdictions and (2) a progress report on climate-related disclosures, which takes stock of progress made over the past year by the new global standard-setter, by national and regional authorities and by firms.

The report on climate-related disclosures looks at:

  • the progress made by the International Sustainability Standards Board (ISSB) in developing its global baseline climate reporting standard and the work of other international standard-setters on assurance over sustainability-related reporting;
  • the progress made in the area of assurance, including the work of the International Auditing and Assurance Standards Board (IAASB), International Ethics Standards Board for Accountants (IESBA), and the work by the International Organization of Securities Commissions (IOSCO) to support the work on both disclosure and assurance standards; and
  • the progress made by jurisdictions on climate-related disclosure practices, including steps being taken by jurisdictions to prepare for adopting, applying or otherwise making use of the ISSB climate-related disclosure reporting standard.

The FSB also welcomes the publication of the 2022 status report by its industry-led Task Force on Climate-related Financial Disclosures (TCFD), which describes the further progress by firms in making TCFD-aligned disclosures.

Please click for the following additional information on the FSB website:


New TCFD status report

17 Oct, 2022

The Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders has published a fifth status report providing an overview of the extent to which companies in their 2021 reports included information aligned with the core TCFD recommendations published in June 2017.

The TCFD found that:

  • The percent of companies disclosing TCFD-aligned information continues to grow, but more urgent progress is needed.
  • All regions have significantly increased their levels of disclosure over the past three years.
  • A majority of asset managers and asset owners report to their clients and beneficiaries.
  • Nearly 50% of asset managers and 75% of asset owners reported information aligned with at least five of the 11 recommended disclosures.
  • The percent of companies disclosing the TCFD recommendations in financial filings or annual reports has increased each year.
  • The availability and quality of climate-related financial disclosures has increased since June 2017.
  • Investors and others use disclosures in decision-making and pricing.

Please click to access the press release and full report on the FSB website.


17 Oct, 2022

The IFRS Foundation has published a list of the members of the ISSB Technical Reference Group (TRG).

The TRG consists of the experts of the technical groups of the former Climate Disclosure Standards Board (CDSB) and Value Reporting Foundation (VRF), which were integrated into the IFRS Foundation this year. It will provide technical advice and support to the ISSB and its technical staff, initially for a one-year period.

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

PRA publishes its thematic feedback from the 2021/2022 round of written auditor reporting

14 Oct, 2022

The Prudential Regulation Authority (PRA) has published a letter to Chief Financial Officers of selected deposit-takers which provides thematic feedback from the PRA’s review of written auditor reports received in 2022.

The letter includes thematic findings on IFRS 9 expected credit loss accounting (ECL) and thematic findings relating to accounting for climate-related financial risks. It also sets out observations on disclosure and benchmark reform.

The full letter is available on the PRA website.

FRC Lab calls for participants for the second phase of its project on ESG Data

14 Oct, 2022

The Financial Reporting Council’s (FRC’s) Financial Reporting Lab (the Lab) is inviting data aggregators and providers, Fintech and RegTech firms, rating agencies, investors, other users of ESG data, and other interested parties to participate in the next phase of its project looking at how companies produce Environmental Social and Governance (ESG) data.

Investors and other stakeholders are increasingly interested in disclosures on the environmental and social impact of companies’ activities and their governance arrangements. 

The first phase of the project focussed on the production, distribution and consumption of ESG data.  This next phase of the project will look at the distribution and consumption of ESG data.

The scope of this phase will be determined in conjunction with participants but the Lab expects it to cover:

  • How data providers access and collect ESG data from companies and other sources.
  • How data providers process company data and, where relevant, generate estimates to create new data sets.
  • How Fintech and RegTech firms are using third party data to build new tools and services.
  • The sources of ESG data that investors use.
  • Identification of barriers to data flow and views on how it can be optimised.
  • Useful formats for data communication.
  • What disclosures on data processes are decision-useful.
  • How investors and others are using ESG data for decision-making.

Further information including the press release and the call for participants is available on the FRC website.

Pre-meeting summaries for the October 2022 IASB meeting

14 Oct, 2022

The IASB meets in London on 18-20 October 2022. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. We summarised the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

The following topics are on the agenda:

Rate-regulated Activities

The staff recommend that the final Accounting Standard retains the definition of allowable expense proposed in the ED, clarifies that a regulatory agreement may determine the amount that compensates for an allowable expense using the same or a different basis from the basis an entity uses for measuring the allowable expense in accordance with IFRS Accounting Standards; and clarifies the treatment of allowable expenses based on benchmarks and includes examples to help entities identify differences in timing in those cases. The staff also recommend that the final Accounting Standard retains the proposals in the ED for entities to account for regulatory assets or regulatory liabilities arising from differences between the regulatory recovery period and assets’ useful lives when there is a direct relationship between an entity’s regulatory capital base and its property, plant and equipment; provides guidance to help entities determine when there is no direct relationship between their regulatory capital base and their property, plant and equipment; and requires entities that have concluded there is no direct relationship between their regulatory capital base and their property, plant and equipment to provide disclosures to enable users of financial statements to understand the reasons for their conclusion.

Contractual Cash Flow Characteristics

The staff recommend that IFRS 7 be amended to require disclosure of, for each class of financial assets and financial liabilities not measured at fair value through profit or loss, of a qualitative description of the nature of the contingent events that could change the timing or amount of contractual cash flows; quantitative information about the potential range of changes to contractual cash flows that could result from the contractual terms; and the gross carrying amount of financial assets and amortised cost financial liabilities subject to these contractual terms. The effective date would be set after the proposals have been exposed.

Equity Method

The purpose of this session is to review the progress of the equity method research project. The staff acknowledge that developing solutions to the application questions has taken longer than anticipated, but they still think it is possible to develop solutions. The IASB is being asked whether they agree to continue the research project with its current objective and approach. 

IFRS Taxonomy

The staff recommends a 30-day comment period for the Proposed IFRS Accounting Taxonomy Update for Lease Liability in a Sale and Leaseback and Non-current Liabilities with Covenants

Maintenance and consistent application

The IASB has on its work plan a project to make three targeted improvements to IAS 37, including one in relation to the discount rate an entity applies in measuring a provision. The IASB will consider developing proposals to specify in IAS 37 whether that rate should reflect its own performance risk. The staff are gathering information to help the IASB reach a tentative decision on this question at a future meeting. The IASB will be asked if any members object to the publication of three IFRS Interpretations Committee agenda decisions: Multi-currency Groups of Insurance Contracts (IFRS 17 and IAS 21); Special Purpose Acquisition Companies (SPAC)—Accounting for Warrants at Acquisition; and Lessor Forgiveness of Lease Payments (IFRS 9 and IFRS 16).

Disclosure Initiative—Targeted Standards-level Review of Disclosures

The staff recommend that the IASB develop a middle ground approach to drafting disclosure requirements with the aim of providing a better framework for entities to use judgement to identify and disclose useful information to users of financial statements. Applying such an approach, disclosure objectives would be accompanied by a prescriptive list of items of information that an entity should disclose to meet the objectives. The staff further recommend the IASB publish the Guidance for the Board as a document posted on the IFRS Foundation website. Furthermore, the staff recommend that the IASB not proceed with any further work on the disclosure requirements in IFRS 13 and IAS 19.

Post-implementation Review (PIR) of IFRS 9—Classification and Measurement

The staff are not recommending any changes to the requirements in IFRS 9. However, to increase the usefulness and transparency of information provided about the overall performance of equity investments for which the other comprehensive income (OCI) presentation election was made, the staff recommend amending paragraph 11A of IFRS 7 to require disclosure of the aggregated fair value of equity investments for which the OCI presentation option is applied at the end of the reporting period and changes in fair value recognised in OCI during the period.

Disclosure Initiative—Subsidiaries without public accountability: Disclosures

In this session, the IASB will discuss the objective and structure of the new Standard and the approach to developing disclosure requirements.

Goodwill and Impairment

The purpose of this meeting is to initiate the IASB’s discussion on the subsequent accounting for goodwill. The IASB will not be asked to make any decisions at this meeting. The staff remind the IASB of its preliminary decision to retain the impairment-only model for the subsequent accounting of goodwill. The staff also provide an overview of respondents’ feedback on the DP and a summary of additional information and recent developments since the feedback on the DP.

ISSB Update

There is no paper for this session.

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

G7 issues statement on climate disclosures and ISSB’s work

14 Oct, 2022

The G7 Finance Ministers and Central Bank Governors have released a statement underlining economic climate actions and its commitment ‘to move towards mandatory climate-related financial disclosures that provide consistent and decision-useful information for market participants and [it welcomes] the global baseline of sustainability reporting standards currently under development by the International Sustainability Standards Board (ISSB)’.

In particular, the G7 stated that ‘support for the global baseline has the potential to improve information and thus mobilise finance for the needed investments, particularly in emerging and developing economies’ and advises the ISSB to work with regional standard setters and local stakeholders during the advisory period.

For more information, see the press release on the G7 presidency website website.

Pre-meeting summaries for the October 2022 ISSB meeting

14 Oct, 2022

The ISSB meets in Montreal on 18-21 October 2022. We have posted our pre-meeting summaries for the meeting that allow you to follow the ISSB’s decision making more closely. We summarised the agenda papers made available by the ISSB and pointed out the main issues and recommendations.

Consultation on Agenda Priorities

The staff previously stated the ISSB’s intention to publish the RFI in the Q4 of 2022. Due to the need to strongly emphasise foundational activities—and the importance of IFRS S1 and IFRS S2 the staff now expect to publish an RFI in the first half of 2023.

General Sustainability-related Disclosures

This is the first decision-making session of the ISSB in relation to the exposure drafts. The staff recommend that the ISSB confirm that information is being provided to meet the information needs of the primary users of general purpose financial reporting who are “existing and potential investors, lenders and other creditors”, in alignment with the IASB’s Conceptual Framework and remove “enterprise value” from the objective and from the definition of materiality which would create alignment with the IASB’s Conceptual Framework but not fundamentally change the focus of the required disclosures. Additional resources and language would clarify the concept of enterprise value and the scope of sustainability-related financial information required. The staff also recommend introducing a requirement to disclose the process of identifying and disclosing material information and/or materiality judgments. The ISSB will also consider whether the term “significant” is needed to achieve the objective of IFRS S1.

Climate-related Disclosures

The staff recommend that the ISSB confirm the requirements for an entity to disclose: its absolute gross Scope 1 and Scope 2 GHG emissions generated during the reporting period, including separate disclosure for the consolidated accounting group and unconsolidated investees; and its Scope 3 GHG emissions, considering the 15 Scope 3 GHG emissions categories described in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The ISSB will consider ways to help entities meet the Scope 3 disclosure requirements, such as deferring the effective date for this disclosure or developing additional guidance. The staff also recommend that the ISSB proceeds with the proposal that entities use the GHG Protocol Corporate Standard. However, entities that have been using a different measurement methiod would be permitted to do so during a transtion period, or while a jurisdiction requires use of that other method.

General Sustainability-related Disclosures and Climate-related Disclosures

The ISSB will be asked to consider some drafting changes that the staff think would improve the interoperability with proposals published in Europe and the US. The staff recommend that the ISSB confirm the use of the TCFD pillars for structuring the core content in IFRS S1 and IFRS S2 and confirm the meaning of the global baseline. In addition to the recommendations in the other papers, the staff recommend that the ISSB confirm that time horizons not be defined for short, medium and long term; that disclosures be required about the effects of climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows for the reporting period (i.e. the current effects); that disclosures are not required to be reported separately for physical risks, transition risks and climate-related opportunities; that separate disclosures be required about assets subject to physical and transition risks and climate-related opportunities, in the form of metrics; the disclosures proposed in in relation to climate resilience; add a requirement to disclose whether and how an entity uses climate-related scenario analysis to inform the identification of climate-related risks and opportunities; and use the term “carbon credit” instead of “carbon offset”.

Industry-based Materials

The ISSB will discuss and begin alignment around the strategy for integrating industry-based materials into IFRS Sustainability Disclosure Standards, including the role of the SASB Standards in [draft] IFRS S1, the industry-based requirements in Appendix B of [draft] IFRS S2, improving the international applicability of the SASB Standards, the ISSB’s upcoming consultation on agenda priorities and advancing SASB projects inherited by the ISSB. The staff are not asking the ISSB to make any decisions in this session.

Consultation on Agenda Priorities

Update on Planned Approach (Agenda Paper 2)

This paper provides the ISSB with an update on the planned approach to and timing of its consultation on agenda priorities and the publication of a request for information (RFI).

The ISSB will not be asked to make any decisions in this session. However, ISSB members will have the opportunity to provide their thoughts and feedback on the planned approach which will inform a subsequent discussion with the ISSB at a later decision-making meeting.

Recommended approach

The staff recommends that the RFI:

  • Outlines the work to build on the foundation established by IFRS S1 and IFRS S2, once finalised
  • Sets out proposals for new research and standard-setting for stakeholder input to inform the board’s decisions on the future work plan

These two primary categories of work set out above are broadly aligned with the two aspects of the ISSB’s ‘strategic balance’ discussed at the July 2022 ISSB meeting, i.e. ‘advancing and enhancing existing materials’ and ‘developing new materials.’ Based on clear feedback from the ISSB and stakeholders, the staff recommends that the ISSB initially devote a majority of its resources to work meant to build on the foundation established by IFRS S1 and S2, which may limit the ISSB’s capacity to add a significant number of new research and standard-setting projects in its initial two-year work plan.

Recommended timeline

The staff previously stated the ISSB’s intention to publish the RFI in the Q4 of 2022. Due to the need to strongly emphasise foundational activities—and the importance of IFRS S1 and IFRS S2 in that context—the staff will propose a timeline for the RFI that allows for significant re-deliberations on [draft] IFRS S1 and [draft] IFRS S2. These deliberations might affect the work plan (e.g. decisions on Appendix B of [draft] IFRS S2). Thus, the RFI can more appropriately reflect what is—and what is not—included in IFRS S1 and IFRS S2, as well as any ISSB decisions on other key aspects relevant to the foundational work (e.g. the role of industry-based materials). The staff expectation is that this would result in the publication of the RFI in the first half of 2023. 

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

IASB concludes webcast series on dynamic risk management

14 Oct, 2022

The IASB technical staff has produced a series of eight webcasts on its dynamic risk management (DRM) project. The final webcast was released today.

The first webcast provided an overview of the project. The next six webcasts focused on elements of DRM. The final webcast released today uses a simplified example to illustrate how the DRM model is expected to work in practice, and how different elements explained in the previous webcasts link together.

Please click to access all webcasts released so far on the IFRS Foundation website.

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