Initial consideration: IFRS 3 Business Combinations—Payment Contingent on Continued Employment during Handover Periods: The IFRS IC received a submission about how an entity accounts for payments (as part of the acquisition agreement) to the sellers of an acquired business. The payments and continued employment aim to ensure the appropriate transfer of knowledge from the sellers to the new management team. The sellers are remunerated for their services at a level comparable to other management executives, but some of the consideration for the shares is withheld until the handover is complete and is forfeited if the individual leaves employment before completion of the handover. The sellers are also entitled to additional payments that are contingent upon meeting a specified level of financial performance and the continued employment during a limited period. The submitter asked whether the entity may split the accounting for the additional payments between remuneration for post-combination services, and additional consideration for the business combination. The staff outreach identified no diversity in accounting treatment. It appears that the accounting described in the agenda decision published in January 2013 is the treatment enforced by the auditors and regulators, although some respondents said some stakeholders disagreed with the outcome because it does not always reflect the economic substance of the arrangement and could even result in recognising a gain from a bargain purchase. The IFRS IC decided to publish a tentative agenda decision stating that no further action is required.

Comment letters on tentative agenda decision: IFRS 17 Insurance Contracts— Premium Receivable from an Intermediary: In its March 2023 meeting, the IFRS IC discussed a submission about how an issuer accounts for premiums receivable from an intermediary. The submission asked, when the policyholder pays the premiums to the intermediary, whether the insurer is required to recognise the premiums receivable from an intermediary as a separate financial asset under IFRS 9 and remove these premiums from the measurement of the group of insurance contracts under IFRS 17. The IFRS IC concluded there is an accounting policy choice that premiums receivables remain in the measurement of a group of insurance contracts under IFRS 17 until recovered or settled in cash (View 1) or it is removed from the measurement of the group of insurance contracts and is recognised as a separate financial asset under IFRS 9 (View 2). 16 comment letters were received and most of the respondents agreed with the technical analysis in the tentative agenda decision and agreed not recommending the IASB to consider adding a standard-setting project to the work plan. The IFRS IC decided to finalise the agenda decision, with some editorial changes.

Comment letters on tentative agenda decision: Homes and Home Loans Provided to Employees: In its March 2023 meeting, the IFRS IC discussed a submission about how an entity accounts for homes and loans to buy homes provided to its employees. Two fact patterns have been submitted: employee home ownership plans and employee home loans. The IFRS IC concluded that such fact patterns may not be widespread, and the amount involved may not be material. The IFRS IC therefore decided not to add this item to the standard-setting work plan and instead to publish an agenda decision. Seven comment letters were received and most of the respondents agreed with the IFRS IC’s conclusion not to add a standard-setting project to the work plan. The IFRS IC decided to finalise the agenda decision, with some editorial changes.

Comment letters on tentative agenda decision: IFRS 9 Financial Instruments—Guarantee over a Derivative Contract: In its March 2023 meeting, the IFRS IC discussed a submission on how to assess whether an issuer accounts for a guarantee written over a derivative contract as a financial guarantee contract or a derivative. The IFRS IC concluded that such a matter is not widespread, and the effect is not material and thus the IFRS IC decided not to add a standard-setting project to the work plan. Six comment letters were received, and all respondents agreed with the IFRS IC’s decision. The IFRS IC decided to finalise the agenda decision.

Work in progress: There was no new matter that has not yet been presented to the IFRS IC.

More In­for­ma­tion

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

Mr Servais began his speech by noting that in June 2023, the ISSB published its inaugural set of sustainability-related disclosure standards and that in July 2023 IOSCO announced its decision to endorse the ISSB standards as fit for purpose for financial markets. Mr Servais stressed:

IOSCO’s endorsement decision calls on 130 member jurisdictions, which regulate more than 95% of the world's financial markets, to consider ways in which they might adopt, apply or otherwise be informed by the ISSB Standards.

He continued to explain that few days later, the European Commission adopted the final set of its own disclosure requirements, which integrate the ISSB standards, in line with IOSCO’s endorsement decision. Mr Servais stressed that with IOSCO’s endorsement backing the ISSB standards, he was confident that many other jurisdictions would follow suit and that IOSCO anticipated that up to 130,000 companies worldwide could eventually disclose sustainability-related information as informed by the ISSB Standards. He highlighted:

Finally, Mr Servais noted that IOSCO will roll out an extensive capacity-building programme and will also put its weight behind the development, by 2024, of high quality standards for assurance of sustainability-related information to enhance their trustworthiness.

Please click to read the full text of the speech on the IOSCO website.

Specifically, the podcast discusses:

• Support for IFRS S1 and IFRS S2 implementation.
• Engagement with jurisdictions and forming a strategy for the adoption of the ISSB.
• ISSB’s future priorities.

Please click to access the podcast on YouTube.

The TIG informs the ISSB about potential implementation questions that could arise when companies implement the new standards IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.

The purpose of the TIG is to solicit, analyse and discuss stakeholder questions arising from implementation of the new standards, to inform the ISSB about those implementation questions, which will help the ISSB determine what, if any, action will be needed to address those questions, and to provide a public forum for stakeholders to learn about the new Standards from others involved with implementation.

Please click for the list of members on the IFRS Foundation website.

Ms Lloyd shared her views about the work currently being done at the International Sustainability Standards Board (ISSB), including how the Board is collaborating closely with colleagues in Europe to deliver on its goals. She discussed the following five aspects:

• The need for global sustainability disclosures. Ms Lloyd noted that investors need decision-useful, consistent, comparable information that enables them to understand sustainability-related risks and opportunities. ​To date, the information that has been provided has been neither consistent, nor tailored to the specific information needs of investors. The ISSB Standards are being developed to enhance investor-company dialogue through by consolidating and inheriting the resources of other investor-focused initiatives in order to reduce fragmentation.
• Overview of IFRS S1 and IFRS S2. Ms Lloyd then gave an overview over the first two ISSB standards, IFRS S1, the general requirements standard, that provides a set of overarching disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term, and IFRS S2 that sets out specific climate-related disclosures and is designed to be used with IFRS S1.
• Support for the ISSB standards. Ms Lloyd especially noted the strong support from the investor community internationally for the consistency and comparability of information the ISSB standards will provide for, the announcement from the Financial Stability Board that as a result of the ISSB standards the work of the TCFD is complete, and endorsement of the standards by the International Organisation of Securities Commissions (IOSCO).
• Cooperation with the European Union. The ISSB welcomes the commitment from the European Commission and EFRAG to support the need for international consistency. The European Union and the ISSB have worked together to improve the interoperability of their respective climate-related disclosure requirements and have managed to achieve a very-high degree of alignment in their climate disclosures. The ISSB's work with European Commission and EFRAG is now focused on how to jointly illustrate the interoperability between the standards.
• Next steps for the ISSB. The ISSB will analyse closely the views of the key stakeholders on the next two-year agenda for the ISSB. Stakeholders have been asked to comment on the strategic direction and balance of the ISSB’s activities; the criteria for assessing which sustainability-related matters to prioritise; and the scope and structure of potential new research and standard-setting projects. An important consideration will be the balance of time spent by the ISSB on advancing new projects and supporting the implementation of IFRS S1 and IFRS S2.

Please click to access the full transcript of the speech on the IFRS Foundation website.

The last consolidated text included international accounting standards and related interpretations issued or adopted by the International Accounting Standards Board (IASB) until 15 October 2008. The new consolidated text now includes the standards and the related interpretations issued or adopted by the IASB and adopted by the Commission until 8 September 2022.

Please click to access the new consolidated text in the Official Journal. Please note that this link offers access to the text in all languages of the European Union.

Initial consideration: IFRS 3 Business Combinations — Payment Contingent on Continued Employment during Handover Periods: The IFRS IC received a submission about how an entity accounts for payments (as part of the acquisition agreement) to the sellers of an acquired business. The payments and continued employment aim to ensure the appropriate transfer of knowledge from the sellers to the new management team. The sellers are remunerated for their services at a level comparable to other management executives, but some of the consideration for the shares is withheld until the handover is complete and is forfeited if the individual leaves employment before completion of the handover. The sellers are also entitled to additional payments that are contingent upon meeting a specified level of financial performance and the continued employment during a limited period. The submitter asked whether the entity may split the accounting for the additional payments between remuneration for post-combination services, and additional consideration for the business combination. The staff outreach identified no diversity in accounting treatment. It appears that the accounting described in the agenda decision published in January 2013 is the treatment enforced by the auditors and regulators, although some respondents said some stakeholders disagreed with the outcome because it does not always reflect the economic substance of the arrangement and could even result in recognising a gain from a bargain purchase. The staff recommends that the IFRS IC publish a tentative agenda decision stating that no further action is required.

Comment letters on tentative agenda decision: IFRS 17 Insurance Contracts — Premium Receivable from an Intermediary: In its March 2023 meeting, the IFRS IC discussed a submission about how an issuer accounts for premiums receivable from an intermediary. The submission asked, when the policyholder pays the premiums to the intermediary, whether the insurer is required to recognise the premiums receivable from an intermediary as a separate financial asset under IFRS 9 and remove these premiums from the measurement of the group of insurance contracts under IFRS 17. The IFRS IC concluded there is an accounting policy choice that premiums receivables remain in the measurement of a group of insurance contracts under IFRS 17 until recovered or settled in cash (View 1) or it is removed from the measurement of the group of insurance contracts and is recognised as a separate financial asset under IFRS 9 (View 2). 16 comment letters were received and most of the respondents agreed with the technical analysis in the tentative agenda decision and agreed not recommending the IASB to consider adding a standard-setting project to the work plan. The staff recommends that the agenda decision be finalised, with some editorial changes.

Comment letters on tentative agenda decision: Homes and Home Loans Provided to Employees: In its March 2023 meeting, the IFRS IC discussed a submission about how an entity accounts for homes and loans to buy homes provided to its employees. Two fact patterns have been submitted: employee home ownership plans and employee home loans. The IFRS IC concluded that such fact patterns may not be widespread, and the amount involved may not be material. The IFRS IC therefore decided not to add this item to the standard-setting work plan but instead to publish an agenda decision. Seven comment letters were received and most of the respondents agreed with the IFRS IC’s conclusion not to add a standard-setting project to the work plan. The staff recommends that the agenda decision be finalised, with some editorial changes.

Comment letters on tentative agenda decision: IFRS 9 Financial Instruments — Guarantee over a Derivative Contract: In its March 2023 meeting, the IFRS IC discussed a submission about how to assess whether an issuer accounts for a guarantee written over a derivative contract as a financial guarantee contract or a derivative. The IFRS IC concluded that such a matter is not widespread, and the effect is not material and thus the IFRS IC decided not to add a standard-setting project to the work plan. Six comment letters were received, and all respondents agreed with the IFRS IC’s decision. The staff recommends that the agenda decision be finalised.

Work in progress: The update from the June 2023 meeting will be presented to the IFRS IC.

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

The following topics are on the agenda:

Work plan: The IASB will receive an update on its work plan. It will not be asked to make any decisions.

Rate-regulated Activities: The IASB will redeliberate the proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities and will be asked to make decisions on credit and other risks and the direct (no direct) relationship concept.

Equity Method: The IASB will be asked to make decisions on the implications of applying its tentative decisions (for investments in associates) to investments in subsidiaries in separate financial statements, and joint ventures. They will also vote on whether to propose amendments to improve the disclosure requirements for investments in associates and whether to expand the project’s scope.

Climate-related Risks in Financial Statements: The IASB will be asked to decide on the objective of the project and on the proposed potential actions to help address concerns about reporting the effects of climate-related risks in the financial statements.

Amendments to the Classification and Measurement of Financial Instruments: The IASB will discuss the feedback received in response to the Exposure Draft.

Business Combinations—Disclosures, Goodwill and Impairment: The IASB will receive a summary of tentative decisions made to date and will be asked to make decisions about the remaining technical aspects of this project. The IASB will also be asked to give permission to ballot an Exposure Draft.

Extractive Activities: The IASB will make decisions about whether to develop requirements or guidance to improve the information an entity discloses about its exploration and evaluation expenditure and activities to provide more useful information to users, and whether to remove the temporary nature of the exemption in IFRS 6.

Business Combinations under Common Control: the IASB will discuss the project direction and the measurement method to apply to a business combination under common control.

Second Comprehensive Review of the IFRS for SMEs Standard: The IASB will discuss overarching topics, which will assist the IASB in its redeliberations of the proposals in Exposure Draft Third edition of the IFRS for SMEs Accounting Standard. The IASB will also discuss specific proposals in the ED with regard to revenue and impairment of financial assets.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures: The IASB will discuss its approach to maintenance of the forthcoming IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures.

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

The following topic is on the agenda:

International Applicability of the SASB Standards: In this meeting, the staff will present feedback that the ISSB received in response to the Exposure Draft Methodology for Enhancing the International Applicability of the SASB Standards and SASB Standards Taxonomy Updates. The staff consider that the feedback broadly supported the ISSB’s direction and the paper states that almost all respondents agreed with the ED. The staff will ask for suggestions on how the staff and the SASB Board Advisors should approach finalising its application of the methodology.

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

The SMEIG discussed the following topics:

• Second comprehensive review of the IFRS for SMEs
  • guidance in the standard versus in educational material;
  • impairment of financial assets;
  • revenue from contracts with customers;
  • control model;
  • joint arrangements;
  • requirement to offset equity instruments;
• International tax reform — Pillar two model rules — Proposed amendments to the IFRS for SMEs;
• Other issues

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