The following topics were discussed:

Power Purchase Agreements: In this meeting, the staff presented the research on how to address accounting issues related to power purchase agreements. Based on the findings of the research and other input received from stakeholders the IASB decided to undertake narrow-scope standard-setting to amend IFRS 9 to better reflect power purchase agreements in the financial statements with the next project milestone to be an exposure draft, exploring amending the ‘own use’ and hedge accounting requirements in IFRS 9.

Work plan: The IASB received an update on its work plan. In addition, the IASB decided to begin the post-implementation review (PIR) of IFRS 16 in the second quarter of 2024 and to consider when to begin the PIR of the hedge accounting requirements of IFRS 9 after the IASB concludes its work on power purchase agreements.

Rate-regulated Activities: The IASB made decisions on the proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities, in particular with regard to unit of account and offsetting, presentation and items affecting regulated rates only when related cash is paid or received.

Maintenance and consistent application: The IASB decided to propose amendments to IAS 21 to require an entity to translate all items (assets, liabilities, equity items, income and expenses, including comparatives) at the most recent closing rate if the entity has a non-hyperinflationary functional currency and presents its financial statements in a hyperinflationary presentation currency; or translates the results and financial position of a foreign operation that has a non-hyperinflationary functional currency into a hyperinflationary presentation currency.

Climate-related and Other Uncertainties in Financial Statements: The staff informed the IASB about current initiatives in progress to address issues related to the reporting of climate-related and other uncertainties in financial statements, including their status and upcoming steps. No decisions were made.

Management Commentary: The IASB received an update on the project. Potential next steps could include collaborating with the ISSB in advancing the project; proceeding with the IASB project and drawing on input from the ISSB where necessary; or pausing the project until the new reporting landscape becomes more settled. The IASB will discuss these options in a joint meeting with the ISSB in January.

Provisions—Targeted Improvements: The IASB decided to continue developing proposed amendments to IAS 37 and make the next project milestone the publication of an exposure draft for stakeholder comment.

Addendum to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard: The IASB decided to publish an addendum exposure draft that proposes amendments to the IFRS for SMEs Standard to align Section 7 Statement of Cash Flows with Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) and Section 30 Foreign Currency Translation with Lack of Exchangeability (Amendments to IAS 21).

Second Comprehensive Review of the IFRS for SMEs Accounting Standard: The IASB decided to finalise the proposals for the new Section 12 Fair Value Measurement without significant amendments to its overall content; not to amend Section 9 Consolidated and Separate Financial Statements to include requirements for investment entities; and to remove the requirement from Section 22 Liabilities and Equity to present the amount receivable as an offset to equity in its statement of financial position if the equity instruments are issued before the entity receives the cash or other resources.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures: The IASB decided to update the Exposure Draft Subsidiaries without Public Accountability: Disclosures for disclosure requirements in the forthcoming IFRS 18 Presentation and Disclosure in Financial Statements.

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

Background

When the ISSB inherited the SASB standards, it found that a small subset of the standards incorporated references to specific jurisdictional laws and regulations that may be globally inapplicable, introduce regional bias, increase application costs, and decrease the comparability and decision-usefulness of the resulting disclosures. The ISSB has therefore developed a methodology for enhancing the international applicability of the SASB standards and SASB standards taxonomy updates without substantially altering the standards’ structure or intent. This methodology has been applied to the relevant SASB standards. The ISSB had previously consulted on the methodology in an exposure draft published in May 2023.

The SASB standards facilitate the implementation and application of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information for preparers.

Changes

With the amendments published today, the ISSB intends to make the SASB standards more internationally applicable and GAAP-agnostic. The amendments remove and replace jurisdiction-specific references and definitions, without substantially altering industries, topics or metrics.

Effective date

To support those entities already using the SASB standards, the ISSB determined that these amendments will be effective for preparers with annual reporting periods beginning on or after 1 January 2025, with early application permitted.

Further information

The following further information is available:

• Updated SASB Standards on the SASB website
• Basis for conclusions on the IFRS Foundation website
• Our UK Accounting Plus project page on the International applicability of the SASB standards

The podcast high­lights projects which were discussed during the meeting in depth:

• IASB work plan.
• Management commentary.
• Power purchase agreements
• Preview of key developments from the IASB during the first half of 2024.

The podcast can be accessed here on the IFRS Foun­da­tion website.

An analysis of changes to the work plan resulting from the IASB dis­cus­sions can be found here.

The following topics were discussed:

ISSB consultation on agenda priorities: ISSB members discussed the feedback on the ISSB’s request for information (RFI) from users of general-purpose financial reporting who self-identified as an ‘investor” when submitting their response to the RFI.

IFRS sustainability disclosure taxonomy: The ISSB discussed proposed changes to the taxonomy resulting from stakeholder feedback on the approach to tagging narrative information, including the granularity and data type of particular narrative disclosures; the approach to modelling the relationship between the requirements in IFRS S1 and IFRS S2; the approach to tagging metrics and targets that are not specified by IFRS Sustainability Disclosure Standards; and improvements to the taxonomy, including the categorical elements and the element labels.

International applicability of the SASB Standards: The IASB ratified the amendments to the SASB Standards and the related updates to the digital SASB Standards Taxonomy. The ISSB also confirmed that it is satisfied that it has complied with the applicable due process requirements to publish the updated SASB Standards. The ISSB expects to publish the amended SASB Standards before the end of 2023.

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

In addition, the Trustees have launched a call for new Committee members.

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

The review considers whether existing guidance is fit for purpose, examines compliance with existing guidance, and makes recommendations for how performance reporting can be improved in the future.

A press release and the full review are available on the HM Treasury website.

The analysis, Building Trust in Sustainability Reporting: The Urgent Need for Integrated Internal Control, highlights the increasing expectations of investors for high quality and reliable sustainability-related information driven by a number of new standards and requirements for mandatory sustainability-related disclosures.  Investors expect companies to produce reliable and connected financial and sustainability reporting and sustainability-related disclosures in order to allow them to make informed economic decisions based upon the information provided.

The analysis indicates that an integrated internal control environment for financial and sustainability reporting will enable companies to meet these investor demands and in turn will lead to increased confidence in the quality of sustainability information through integration into the mainstream reporting process.  IFAC comments:

Through an integrated control environment based on an integrated mindset, companies will achieve greater connectivity of functions, processes and systems leading to enhanced data quality to improve decision making on strategy, risk, opportunity management and governance-related matters.  This is the foundation for transitioning to a more sustainable business model and enhancing investor and stakeholder confidence in sustainability performance.

The analysis explains that an integrated internal control environment establishes robust data collection, processes and controls through:

• Effective governance
• Risk and materiality assessments
• Sustainability reporting policy and process development
• Robust data management and reporting systems
• Continuous improvement framework

The analysis provides guidance on how entities might go about addressing the challenges associated with collecting, processing and analysing sustainability information in the design of the internal control environment and also the role that the finance function and professional accountants will play.

The press release and the analysis are available on the IFAC website.

Below is an analysis of all changes made to the work plan since our last analysis on 20 November 2023.

Stan­dard-set­ting projects

• Financial instruments with characteristics of equity — After publishing the exposure draft in November 2023, this project is now in the exposure draft feedback stage which is expected to begin in Q1 2024

Main­te­nance projects

• Addendum to the exposure draft 'Third edition of the IFRS for SMEs Accounting Standard' — An exposure draft is now expected in Q2 2024 (previously H1 2024)
• Amendments to the classification and measurement of financial instruments — Final amendments are now expected in Q2 2024 (previously H1 2024)
• Annual Im­prove­ments to IFRS Accounting Standards — Feedback discussions on the exposure draft of the following projects will now begin in Q1 2024 (pre­vi­ously January 2024):
  • Cost Method (Amend­ments to IAS 7)
  • Dere­cog­ni­tion of Lease Li­a­bil­i­ties (Amend­ments to IFRS 9)
  • De­ter­mi­na­tion of a ‘De Facto Agent’ (Amend­ments to IFRS 10)
  • Dis­clo­sure of Deferred Dif­fer­ence between Fair Value and Trans­ac­tion Price (Amend­ments to Guidance on im­ple­ment­ing IFRS 7)
  • Gain or Loss on Dere­cog­ni­tion (Amend­ments to IFRS 7)
  • Hedge Accounting by a First-time Adopter (Amend­ments to IFRS 1)
  • In­tro­duc­tion and Credit Risk Dis­clo­sures (Amend­ments to Guidance on im­ple­ment­ing IFRS 7)
  • Trans­ac­tion Price (Amend­ments to IFRS 9)

• Climate-related and other uncertainties in the financial statements — A direction on the project is now expected in Q2 2024 (previously Q1 2024)
• Power purchase agreements — The IASB has decided to publish an exposure draft as next project step; it is expected in Q2 2024
• Provisions — Targeted improvements — The IASB has decided to publish an exposure draft as next project step; it is expected in Q2 2024

Research projects

• Extractive activities — This project is no longer in the work plan as it has been concluded by publishing a project summary in December 2023

Other projects

• IFRS Accounting Taxonomy Update — Common practice (Financial in­stru­ments) and general im­prove­ments— Feedback dis­cus­sions on the proposed IFRS taxonomy update are expected in February 2024 (previously Q1 2024)
• IFRS Accounting Taxonomy Update — Primary financial statements — A proposed IFRS taxonomy update is now expected in Q2 2024 (previously H1 2024)
• IFRS Accounting Taxonomy Update — Subsidiaries without public accountability: disclosures and amendments to IFRS 7 and IFRS 9 — This project is added to the work plan with a proposed IFRS taxonomy update expected in H2 2024
• IFRS Sus­tain­abil­ity Dis­clo­sure Taxonomy — The issuance of an IFRS Sustainability Disclosure Taxonomy is expected in Q2 2024

The above is a faithful com­par­i­son of the IASB and ISSB work plan at 20 November 2023 and 18 December 2023. For access to the current work plan at any time, please click here.

The podcast looks back at the ISSB’s progress in 2023, IOSCO’s endorsement of the ISSB standards, and foundational work to support the implementation of IFRS S1 and IFRS S2 including capacity building, interoperability and connections.

It also reflects on highlights from December 2023, including:

• The ISSB’s engagements at COP28;
• The launch of the IFRS sustainability knowledge hub; and
• Nature and social aspects of climate-related risks and opportunities.

For more information and access to the podcast, please see the press release on the IFRS Foundation website.

The Government Financial Reporting Manual (FReM) is the technical accounting guide to the preparation of financial statements. It complements guidance on the handling of public funds published separately by the relevant authorities in England and Wales, Scotland and Northern Ireland. The FReM is prepared following consultation with the Financial Reporting Advisory Board (FRAB) and is issued by the relevant authorities who are:

• HM Treasury 
• the Welsh Government 
• the Scottish Government
• the Executive Committee of the Northern Ireland Assembly
• the Department of Health and Social Care
• CIPFA/LASAAC

The FReM applies directly to all entities, and to funds, flows of income and expenditure and any other accounts that are prepared on an accruals basis and consolidated within Whole of Government Accounts (with the exception of the accounts of any reportable activities that are not covered by an Accounts Direction). It does not apply to Local Government, those Public Corporations that are not Trading Funds, and NHS Trusts, NHS Foundation Trusts and Clinical Commissioning Groups.

The FReM is separated into five sections:

• Part A: Purposes, principles and best practice
• Part B: Form and content of government annual reports and accounts
• Part C: Application of accounting standards for government annual reports and accounts
• Part D: Further guidance for government annual reports and accounts
• Part E: Additional guidance

The latest version of the FReM 2023-24 and 2024-25 are available on the HM Treasury website.