IFRS Foundation Trustees and Due Process Oversight Committee hold October 2022 meetings

28 Nov, 2022

The IFRS Foundation Trustees met on 25–26 October 2022 and the Due Process Oversight Committee (DPOC) met on 26 October 2022. Both meetings were held in Seoul.

Trustees meeting

Meeting activities included the following:

  • Report of the Chair of the Trustees and the Executive Director 
  • The history of SASB standards
  • Report of the Chair of the ISSB
  • Greenhouse gas emissions
  • Report of the Chair of the IASB
  • Strategy for promoting sustainable operations of the IFRS Foundation
  • Engagement with the Chair of the Monitoring Board
  • Membership of the IFRS Sustainability Standards Advisory Forum
  • Data for green finance
  • IFRS Foundation Transitional Advisory Group
  • Reports from the Trustee Committee meetings
  • Stakeholder engagement

DPOC meeting

Meeting activities included the following:

  • IASB-related matters
    • Update on IASB technical activities
    • IASB Consultative Groups — Annual review
    • IASB Annual reporting protocol
    • Educational material on IFRS Accounting Standards — review of due process
  • ISSB-related matters
    • Update on ISSB technical activities
    • Due process for maintaining and enhancing the SASB Standards
  • Correspondence

For more information, see the full summary of the Trustees' meeting and the full summary of the DPOC meeting on the IFRS Foundation’s website.

Updated IASB and ISSB work plan — Analysis (November 2022)

28 Nov, 2022

Following the IASB's and ISSB's November 2022 meetings, we have analysed the work plan on the IFRS Foundation website to see what changes have resulted from the meetings and other developments since the work plan was last revised in October 2022.

Below is an analysis of all changes made to the work plan since our last analysis on 25 October 2022.

Stan­dard-set­ting projects

  • Financial instruments with characteristics of equity — The expected date for the exposure draft has been added for H2 2023.

Main­te­nance projects

  • Amend­ments to the clas­si­fi­ca­tion and mea­sure­ment of financial in­stru­ments —This project exposure draft is now expected in Q2 2023 (previously H1 2023).
  • International tax reform — pillar two model rules — This project has now been added to the work plan and an exposure draft is expected in January 2023.
  • Lack of exchangeability (amendments to IAS 21) — A decision on the project’s direction is expected in December 2022 (previously no date given).
  • Non-current liabilities with covenants (amendments to IAS 1) — Project is removed from work plan since the issuance of amendments on 31 October 2022.
  • Supplier finance arrangements — Amendments are expected to be issued in H1 2023.

Strategy & governance projects

  • ISSB consultation on agenda priorities — The request for information will occur in H1 2023 (previously December 2022).

Research projects

  • Ex­trac­tive ac­tiv­i­ties — A decision on the direction of the project is now expected in Q2 2023 (pre­vi­ously H1 2023).
  • Goodwill and impairment — The decision on the project direction is now expected in December 2022 (previously November 2022).

Other projects

  • IFRS accounting taxonomy update — 2022 General Im­prove­ments and Common Practice — Feedback on the proposal is expected in Q1 2023.
  • IFRS accounting taxonomy update — amendments to IFRS 16 and IAS 1 — Feedback on the proposal is expected in Q1 2023.

The above is a faithful com­par­i­son of the IASB and ISSB work plan at 25 October 2022 and 28 November 2022. For access to the current work plan at any time, please click here.

Pre-meeting summaries for the November 2022 IFRS Interpretations Committee meeting

28 Nov, 2022

The IFRS Interpretations Committee (Committee) meets on 29 November 2022. The Committee will discuss one new item, six potential annual improvements to IFRS Accounting Standards and an item for input on an IASB project.

New item: IFRS 16 Leases—Definition of a Lease: Substitution Rights: The Committee received a submission about how to assess whether a contract contains a lease applying IFRS 16 when the supplier has particular substitution rights and at what level an entity evaluates whether that right is substantive. The contract in the fact pattern is for the use of 100 similar assets. The supplier has the practical ability to substitute alternative assets throughout the period of use but is expected to benefit economically from the exercise of its right to substitute only after some time into the period of lease. The staff concluded that there is an identified asset because the asset is specified and the supplier’s substitution right is not substantive throughout the period of use. The staff also concluded that the level to evaluate whether the substitution right is substantive is on each asset. The staff recommend not adding a standard-setting project to the work plan and instead to publish a tentative agenda decision.

Potential annual improvements to IFRS Accounting Standards: The staff will ask whether the Committee members agree with their preliminary views on the following six proposed amendments to IFRS Accounting Standards and to include them in the next annual improvements cycle:

  • IFRS 1 First-time Adoption of International Financial Reporting Standards—terminology update
  • IFRS 10 Consolidated Financial Statements—'De facto agent’ assessment
  • IFRS 9 Financial Instruments—terminology update
  • IAS 7 Statement of Cash Flows—terminology update
  • IFRS 7 Financial Instruments: Disclosures—reference update
  • IFRS 7 Financial Instruments: Disclosures—implementation guidance

Input on IASB project: Post-implementation Review (PIR) of IFRS 15 Revenue from Contracts with Customers: The IASB has started the PIR of IFRS 15 which aims at assessing whether the effects of applying new requirements on users of financial statements, preparers, auditors and regulators are as intended when the IASB developed those requirements. The purpose of the discussion is to ask the Committee members to share their views on the implementation and ongoing application of IFRS 15, including the matters that the Committee members think the IASB should consider in the PIR of the Standard.

Work in progress: There are two new matters that have not been presented to the Committee.

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

Council of the European Union adopts CSRD

28 Nov, 2022

After the European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD) on 10 November 2022, the Council of the European Union has now given the final green light.

Following the Council’s approval today of the European Parliament's position, the legislative act was adopted. After being signed by the President of the European Parliament and the President of the Council, it will be published in the Official Journal of the European Union and will enter into force 20 days afterwards. The new rules will need to be implemented by member states 18 months later.

The effective date of the CSRD depends on the type of company. For EU companies already required to prepare a non-financial information statement, the CSRD is effective for periods commencing on or after 1 January 2024. Large UK and other non-EU companies listed on an EU regulated market (i.e. those meeting two of the three following criteria: more than €20 million total assets, more than €40 million net turnover and more than 250 employees) will be subject to the CSRD requirements for periods commencing on or after 1 January 2025.  

UK and other non-EU companies that are not listed in the EU but which have substantial activity in the EU will be subject to the CSRD for periods commencing on or after 1 January 2028.

Please click to see the press release announcing the adoption on the Council's website.

DPOC to discuss shortened comment period for OECD Pillar Two proposals

28 Nov, 2022

The Due Process Oversight Committee (DPOC) will hold a supplementary meeting on 1 December 2022.

There are two topics on the agenda:

  • Approval for a shortened comment period for an exposure draft of proposed amendments to IAS 12 Income Taxes; and
  • Due process review of the post-implementation review of the classification and measurement requirements of IFRS 9 Financial Instruments.

The amendments to IAS 12 relate to the new project the IASB added to its work programme last week, which aims to address concerns about the potential implications of the imminent implementation of the OECD Pillar Two rules on the accounting for income taxes. The IASB has tentatively decided to introduce:

  • a temporary exception from accounting for deferred taxes arising from the implementation of the rules; and
  • targeted disclosures requirements for affected companies.

The IASB expects to publish an exposure draft in January 2023.

Please click to access the full agenda and papers for the meeting on the IFRS Foundation website.

IFRS Foundation proposes second update to IFRS Taxonomy 2022

28 Nov, 2022

The IFRS Foundation has issued a proposed IFRS Taxonomy Update, 'IFRS Accounting Taxonomy 2022 Proposed Update 2 — 'Lease Liability in a Sale and Leaseback' and 'Non-current Liabilities with Covenants''.

The proposed changes reflect two recent amendments to IFRS Accounting Standards:

Details on the proposed changes are available in the press release on the IFRS Foundation website and in proposed update itself. Comments are requested by 28 December 2022.

FRC publishes its 2022 review of stewardship reporting

28 Nov, 2022

The Financial Reporting Council (FRC) has published its ‘Review of Stewardship Reporting 2022’ ("the review").

The review sets out key messages from stewardship reports assessed in spring 2022, sets out expectations for reporting in 2023, and outlines changes to the application deadlines for 2023.  To support stakeholders' continued improvement, the review also gives guidance on the reporting of exercising rights and responsibilities and monitoring and holding third-party managers to account.

The FRC has seen improvements in a number of areas.  These include:

  • The quality of activity and outcome reporting for engagement, collaboration and escalation.
  • Signatories’ contributions to addressing market-wide and systemic risks, and improving the functioning of financial markets.
  • How signatories monitor and hold to account third parties, such as asset managers and service providers.
  • Increased transparency of organisational purpose.
  • Stewardship in asset classes other than listed equity, such as fixed income and real estate.

However, the report also notes that there still needs to be greater emphasis by signatories on reporting their activities and outcomes during the reporting period, using both quantitative and qualitative evidence.

In 2023 the FRC's key areas of focus will include reporting on the outcomes of engagament providing case studies to illustrate both the activity in the year and progress towards those outcomes.  

press release and the full review are available on the FRC website.

FRC publishes report setting out examples of good practice to improve auditor scepticism and challenge

28 Nov, 2022

The Financial Reporting Council (FRC) has published a report setting out examples of good practice to improve auditor scepticism and challenge.

The report highlights that the most significant quality issues identified by the FRC over a number of years involve the inconsistent application of professional scepticism and challenge, resulting in the poor application of professional judgement.

The report sets out the key attributes of a high-quality environment that enable professional scepticism and challenge in an audit and provides examples of good practice from the FRC’s ongoing supervision work.

A press release and the full report are available on the FRC website.

Agenda for the December 2022 ITCG meeting

25 Nov, 2022

The agenda is available for the next meeting of the IFRS Taxonomy Consultative Group (ITCG), which will be held by video conference call on 5 December 2022.

The ITCG will discuss the following topics:

  • Digital representation of specific proposals related to the primary financial statements project:
    • subtotals/categories in the statement of profit or loss
    • disclosure of operating expenses by nature in the notes
  • Summary of feedback on the staff draft of the IFRS Sustainability Disclosures Taxonomy

The agenda papers for this meeting are available on the IASB website.

November 2022 ISSB meeting notes posted

25 Nov, 2022

The ISSB met in Frankfurt on 15-16 November. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed:

General Sustainability-related Disclosures

The ISSB decided to clarify that the requirement to revise comparative information to reflect updated estimates applies to current period estimates that were disclosed in prior periods (historic estimates), and does not apply to forward-looking estimates. The ISSB also confirmed the proposed requirement for an entity to report its sustainability-related financial disclosures at the same time as its related financial statements but intends to introduce transitional relief for a limited period of time to permit an entity to report sustainability-related financial disclosures potentially up to half a year after the publication of its annual financial statements. The ISSB has not decided how long the transitional relief should last.

Climate-related Disclosures

The ISSB considered the proposed requirements for an entity to disclose information on strategy and decision-making (including transition planning) and climate-related targets. The ISSB confirmed that an entity would be required to disclose Information about its strategy and decision-making and information about its climate-related targets. The ISSB also decided to introduce additional disclosure requirements about the assumptions made, and dependencies identified, by the entity in developing its transition plan and the implications for the entity’s transition plan if the assumptions are not met. Furthermore, they also decided to include requirements to disclose information about the scope of the target to enable users to understand whether the target applies to the entity in its entirety or to only a part of the entity (for example, specific business units or specific geographic regions).

General Sustainability-related Disclosures and Climate-related Disclosures

The proposed requirements in paragraph 22 of Exposure Draft IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information ([draft] S1) and the equivalent requirements in paragraph 14 of Exposure Draft IFRS S2 Climate-Related Disclosures ([draft] S2) would require entities to disclose the effects of its sustainability-related risks and opportunities on its financial position, financial performance and cash flows for the reporting period and the anticipated effects. The staff presented a summary of the feedback received and asked the ISSB to provide feedback on some illustrative examples they have prepared. 

ISSB Taxonomy

In May 2022, the IFRS Foundation published a staff draft of a taxonomy for digital reporting representing the disclosure proposals in the two ISSB exposure drafts. The staff draft was accompanied by a Request for Feedback soliciting public feedback on staff recommendations on fundamental matters that need to be considered early to enable the ISSB to develop a Taxonomy. The purpose of this meeting was to provide a summary of the feedback obtained during the feedback period.

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

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.