The VRF was formed in June 2021 with the merger of the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB). The consolidation with the IFRS Foundation will, ‘inform the work of the IFRS Foundation through the industry-based approach of the SASB Standards and the Integrated Reporting Framework’.

This marks the completion of a COP26 objective to consolidate leading investor-focused sustainability disclosure organisations with the IFRS Foundation. In February 2022, the CDSB completed its consolidation into the IFRS Foundation.

For more information, see the press release on the IFRS Foundation website.

The Guidance updates the version issued in June 2018 with the following:

• the changes introduced by The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 (SI 2022/31) and The Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022 (SI 2022/46) which require certain entities to make climate-related financial disclosures in line with the Taskforce on Climate-related Financial Disclosures(TCFD) recommendations;
• amendments to The Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410) and The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (SI 2008/1911), which implement the government’s policy on Streamlined Energy and Carbon Reporting (SECR). The SECR amendments were made to the appendices that relate to the directors’ report disclosure requirements;
• amendments to The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (SI 2008/1911) introduced by The Statutory Auditors Regulations 2017 (SI 2017/1164), which requires a traded Limited Liability Partnership (LLP) or banking LLP to prepare a strategic report;
• amendments to the definition of a public interest entity (PIE) to align it with the existing legislation; and
• some minor typographical or presentational corrections.

A press release and the 2022 Guidance on the Strategic Report are available on the FRC website.

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.