The podcast is hosted by IFRS In­ter­pre­ta­tions Committee Chair and IASB member Bruce Mackenzie and Technical Staff members Riana Wiesner and Jawaid Dossani and focused on whether a contract that includes a particular substitution right is considered a lease (IFRS 16).

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

The following topics are on the agenda:

Metrics and Targets

The staff recommend minor drafting changes to clarify that the objective of disclosures on metrics and targets in the proposals is to enable users to understand performance on sustainability-related risks and opportunities, including (but not limited to) how an entity measures, monitors and manages such risks and opportunities.

Disclosure of judgements, assumptions and estimates

The staff recommend that the ISSB require, in addition to requiring disclosure of the sources of estimation uncertainty, the judgements that the entity has made in the process of preparing and disclosing its sustainability-related financial information. They also recommend requiring disclosure of the sources that have been applied in preparing the entity’s sustainability-related financial disclosures, including the industry or industries specified in IFRS Sustainability Disclosure Standards, SASB Standards or other industry-based sources of guidance.

The staff recommend clarifying that the words ‘to the extent possible’ mean ‘to the extent possible taking into consideration the requirements of IFRS Accounting Standards (or other relevant GAAP)’ and to require an entity to explain significant differences in the financial data and assumptions that the entity has used in preparing its sustainability-related financial disclosures, in comparison to those that the entity has used in preparing its financial statements.

Commercially sensitive information about opportunities

The staff recommend introducing an exemption in [draft] S1 that would permit entities, in limited circumstances, to exclude information about a sustainability-related opportunity when the information is commercially sensitive. It would specify that this would not be applicable to information which is already publicly available, nor would it able to be used to justify broad non-disclosure, using commercial sensitivity as a justification, or to avoid disclosing information about risks.

Reasonable and supportable information that is available at the reporting date without undue cost or effort

The staff recommend that the ISSB make minor drafting changes to clarify that when sustainability-related risks and opportunities have affected or are expected to affect the information in an entity’s financial statements, the entity is required to explain the connections between those current and anticipated financial effects and the sustainability-related risks and opportunities. They also recommend clarifying the relationship between resilience assessment requirements and the requirements to disclose current and anticipated financial effects by emphasising those requirements can be applied independently, but the resilience assessment can inform the disclosures of current and anticipated financial effects. Furthermore, clarifying that there is no requirement for an entity to perform a resilience assessment to determine current and anticipated financial effects of sustainability-related risks and opportunities.

Using scenario analysis to assess climate resilience

The staff recommend that the ISSB require an entity to use an approach to climate-related scenario analysis that enables the entity to consider all reasonable and supportable information that is available without undue cost or effort, at the reporting date, including information about past events, current conditions and forecasts of future economic conditions, taking into consideration the degree of the entity’s exposure to climate-related risks and opportunities and the skills, capabilities and resources available to the entity to conduct climate-related scenario analysis.

Greenhouse gas emissions—reporting period relief

The staff recommend that the ISSB provide relief that allows an entity to measure its GHG emissions using information for reporting periods that are different from the entity’s reporting period when that information arises from entities in its value chain with reporting periods that are different from that of the entity, on condition that the entity uses the most recent data available without undue cost or effort to measure and disclose its GHG emissions, the length of the reporting periods is the same and the entity discloses the effects of significant events and changes in circumstances (relevant to its GHG emissions information) that occur between the reporting dates of the entities in its value chain and the date of the entity’s general purpose financial reporting.

Climate-related targets—Latest international agreement on climate change

The staff recommend that the ISSB amend the proposal in paragraph 23(e) of [draft] S2 to require an entity to disclose how the latest international agreement on climate change has informed any climate-related targets it has set.

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

The following topics are on the agenda:

Maintenance and consistent application

The IASB will make the final decisions on its project on Supplier Finance Arrangements. The staff recommend that entities be required to apply the amendments for annual reporting periods beginning on or after 1 January 2025, with earlier application permitted. The staff also recommend that the IASB require entities to apply the amendments retrospectively in accordance with IAS 8. 

Equity Method

IFRS 10 requires that when a parent loses control of a subsidiary it recognises a gain or loss. However, if the subsidiary is sold to an associate or joint venture of the parent, IAS 28 requires that the gain be limited to the  extent of the unrelated investors’ interests. This is perceived as a conflict. The IASB will discuss four ways of addressing the issue. The staff are seeking feedback and the IASB will not be asked to make any decisions at this meeting.

Business Combinations—Disclosures, Goodwill and Impairment

In September 2022, the IASB tentatively decided to exempt entities from some disclosure requirements but did not establish the conditions for that exemption. The staff are recommending that the exemption be based on whether disclosing the information could be expected to prejudice seriously any of the entity’s objectives for a business combination. Application guidance would set out the factors that would need to be considered when assessing if the exemption applies and entities would need to disclose the reason for applying the exemption. The staff also recommend that, subject to the proposed exemption, an entity be required to disclose quantitative information about total expected synergies disaggregated by nature (e.g. total revenue, total cost synergies), when the synergistic benefits are expected to start, and how long they are expected to last. In addition, the staff will ask the IASB to clarify a vote taken in the September 2022 meeting. The staff ask whether the vote means that an entity should be required to disclose a qualitative statement as to whether actual performance in subsequent periods met the target, to which the proposed exemption would apply, or whether it means that an entity is not required to disclose such a statement.

Primary Financial Statements

The staff recommend:

• Disaggregation: not requiring disaggregation of material information in relation to information about the nature of operating expenses that are included in a function line item in the statement of profit or loss; clarify the requirements for how disaggregated amounts are labelled (described); add a requirement that any line items presented in the statement(s) of financial performance and the statement of financial position must be recognised and measured in accordance with IFRS Accounting Standards but not prohibit the disaggregation of income and expenses in the notes to the financial statements into components not recognised and measured in accordance with IFRS Accounting Standards; and extend the proposals in the ED for the label ‘other’ to be used only if no more informative label can be found
• Comprehensive income: withdraw the proposal to relabel the two categories of other comprehensive income as remeasurements permanently reported outside profit or loss and income and expenses to be included in profit or loss in the future
• Statement of cash flows: confirm that entities other than entities with specified main business activities classify interest received as cash flows arising from investing; and confirm that entities with specified main business activities classify dividends received (other than dividends received investments accounted for using the equity method), interest paid and interest received in a single category of the statement of cash flows (either as cash flows from operating, investing or financing activities)

IFRS Accounting Taxonomy

In November 2022, the IASB published the Proposed IFRS Taxonomy Update—Lease Liability in a Sale and Leaseback and Non-current Liabilities with Covenants. The purpose of this meeting is to summarise the feedback received on the PTU and set out the next steps in the publication of the Update.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The staff recommend that the IASB proceed with the proposal to include reduced disclosure requirements for IFRS 1. The staff also recommend that when an eligible subsidiary that elects, revokes an election or is no longer eligible to apply the Standard, it does not apply the requirements in IAS 8 on changes in accounting policies or be required to present a third statement of financial position. Finally, the staff recommend that the IASB confirm its proposal to consider amendments to the Standard when it publishes an exposure draft of a new or amended IFRS Accounting Standard.

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

The ITCG discussed 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 meeting summary is available on the IFRS Foundation website.

During the meeting, par­tic­i­pants were provided an update of the ISSB’s activities at the COP 27 Climate Summit as well as discussions between the ISSB and the European Union. In addition, the participants were updated on the developments of the ISSB meeting on 1 and 3 November 2022 and were asked to provide feedback related to the European Sustainability Reporting Standards and Global Reporting Initiatives Standards as sources for IFRS S1 guidance. Further, the working group participants discussed staff papers for the ISSB’s 15–16 November 2022 meeting.

For more information, see the summary on the IFRS Foundation’s website.

The study Do companies disclose relevant information about intangibles? – Insights from business model reporting and risk reporting investigates the role of intellectual capital in the value creation process and provides a baseline in intangibles reporting for a sample of intellectual capital intensive high-tech companies. It can be downloaded here from the EFRAG website.

The study The Theory and Practice of Discounting in Financial Reporting under IFRS notes the different discounting objectives and theoretical bases in different IFRSs and looks at:

• the underlying rationale for the different approaches in each IFRS; 
• the economic consequences of the different approaches used; and
• where appropriate, alternative methods that may be applicable. 

It can be downloaded here from the EFRAG website.

The amendments clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale.

The UKEB's draft assessment concludes that:

• the Amendments meet the criteria of relevance, reliability, comparability and understandability required of the financial information needed for making economic decisions and assessing the stewardship of management, as required by SI 2019/685 (see Regulation 7(1)(c)); and 

• application of the Amendments is not contrary to the principle that an entity’s accounts must give a true and fair view as required by SI 2019/685 (see Regulation 7(1)(a)).

Additionally the UKEB tentatively concludes that the Amendments are likely to be conducive to the long-term public good in the UK.

Comments on the draft Endorsement Criteria Assessment are requested by 5 April 2023.

For more information, see the Invitation to Comment and draft Endorsement Criteria Assessment on the UKEB's website.

The UKEB will consider stakeholder views when drafting its comment letter to the IASB on its proposals.

Further details and informaion on how to register for the meeting are available on the UKEB website.

Below is an analysis of all changes made to the work plan since our last analysis on 19 December 2022.

Stan­dard-set­ting projects

• Disclosure Initiative — Targeted Standards-level Review of Disclosures  — The project summary is now expected in March 2023 (previously Q1 2023).
• Second comprehensive review of the IFRS for SMEs Accounting Standard — Feedback on the exposure draft is expected in Q2 2023 (previously H1 2023).

Main­te­nance projects

• Amend­ments to the clas­si­fi­ca­tion and mea­sure­ment of financial in­stru­ments — This project exposure draft is now expected in March 2023 (pre­vi­ously Q1 2023).
• International Tax Reform — Pillar Two Model Rules — Feedback on the exposure draft is expected by April 2023.
• Lack of ex­change­abil­ity (amend­ments to IAS 21) — Final amend­ments to IAS 21 are expected in H2 2023 (previously H1 2023).

Research projects

• Equity Method— A decision on the project direction is expected in April 2023.
• Extractive Activities — A decision on the project direction is now expected in H2 2023 (previously Q2 2023).
• Post-implementation Review of IFRS 15 — Request for information is expected in Q2 2023 (previously H1 2023).
• Post-implementation review — IFRS 9 (Classification and measurement) — Removed from the work plan since the release of the final project report and feedback statement concluded the project on 21 December 2022.

Strategy & governance projects

• ISSB Consultation on Agenda Priorities — Request for information is expected in Q2 2023 (previously H1 2023).

Other projects

• IFRS Sustainability Disclosure Taxonomy — The proposed IFRS Sustainability Disclosure Taxonomy is expected in H2 2023.

The above is a faithful com­par­i­son of the IASB and ISSB work plan at 19 December 2022 and 30 January 2023. For access to the current work plan at any time, please click here.

The 19-minute webcast:

• provides background on the IASB’s alignment approach applied during this second comprehensive review;
• explains how this approach was applied to develop the proposals for financial instruments; and
• summarises the proposals for financial instruments.

The webcast can be accessed through the press release on the website of the IFRS Foundation.

The focus of the webinar, which accompanies the December 2022 call for papers on IFRS 9 hedge accounting requirements, will be on potential research on the usefulness of the hedge accounting disclosure requirements for investors. IASB technical staff will be presenting in the webinar and there will be an opportunity for academics to ask questions.

Please click for more information and registration on the IFRS Foundation website.