The SMEIG discussed the following topics:

• Second comprehensive review of the IFRS for SMEs
• Proposed revised Section 23 Revenue from Contracts with Customers
• Impairment of financial assets — results of survey on SMEs’ exposure to credit risk
• Addendum to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard
  • Lack of exchangeability and supplier finance arrangements

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

According to the press release, the toolkit covers the following:

• Model guidance on sustainability-related financial disclosures
• Transition plans training tool
• Gap analysis checklist
• Climate metrics training tool

The SSE has advised that additional guidance and tools will be released as required.

For more information and to access the toolkit, please see the press release on the SSE website.

In its draft comment letter, EFRAG welcomes the IASB's efforts and approach to address issues that arise in practice related to IAS 32 by clarifying some of the underlying principles in IAS 32 and adding application guidance to facilitate consistent application of the principles.

However, EFRAG suggests that the IASB should:

• avoid classification changes that do not raise concerns in practice in order to avoid unintended consequences;
• consider whether a liability should be recognised for a mandatory tender offer;
• discuss more comprehensively measurement issues of financial liabilities within the scope of IAS 32;
• reconsider the initial accounting within equity for written put options on non-controlling interest;
• consider that many stakeholders disagree with presenting subsequent changes to the carrying amount of the financial liability in profit or loss;
• explore the alternative model to treat contracts which meet the definition of a derivative as a stand-alone derivative at fair value through profit or loss; and
• allow reclassification of 'passage-of-time changes'.

EFRAG also welcomes the proposed improvements to disclosures in IFRS 7, but expresses some concerns and suggestions.

Comments on EFRAG's draft comment letter are requested by 20 March 2024. For more information, see the press release and the draft comment letter on the EFRAG website.

The IASB only meeting will see discussions on the following:

• Second com­pre­hen­sive review of the IFRS for SMEs Standard
• Updating the Subsidiaries without public accountability standard
• Dis­clo­sure ini­tia­tive — Sub­sidiaries without public ac­count­abil­ity: Dis­clo­sures
• IFRS 9 Amendments to classification and measurement
• Power purchase agreements
• PIR of IFRS 15 Revenue from contracts with customers
• Taxonomy
• Maintenance and consistent application

The full agenda for the meeting (including the joint meeting with the ISSB) can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries, as well as observer notes from the meeting on this page as they become available.

During the meeting, Council members received general updates on the activities of the IASB, the ISSB and the IFRS Foundation Trustees. They then held in-depth discussions on the primary financial statements project, the ISSB adoption strategy, and the IASB strategy refresh.

The full meeting summary is available on the IFRS Foundation's website.

The Amendments specify when a currency is exchangeable into another currency and, consequently, when it is not, how an entity determines the exchange rate to apply when a currency is not exchangeable, and the disclosures an entity provides when a currency is not exchangeable.

EFRAG recommends the endorsement of the Amendments. EFRAG’s assessment is that the Amendments meet all the technical endorsement criteria of the IAS Regulation and are conducive to the European public good.

A press release and the endorsement advice letter to the European Commission are available on the EFRAG website. EFRAG has also updated its endorsement status report.

The update reports on the EFRAG's Financial Reporting Board (EFRAG FRB) webcast meeting on 7 December 2023, the EFRAG FRB and the EFRAG Financial Reporting Technical Expert Group (FR TEG) joint meeting on 19 December 2023 and EFRAG FR TEG meetings on 5 and 20 December 2023. 

The update also lists EFRAG publications issued in December including: 

• EFRAG's Final Comment Letter in response to the IASB’s Exposure Draft IASB/AI/ED/2023/1 Annual Improvements-Volume 11

The update also covers EFRAG's sustainability reporting and related activities.

Please click to download the December 2023 EFRAG Update from the EFRAG website.

Scope 3 emissions form an important component of investment risk analysis and investors have for some time been calling for businesses to report their material Scope 3 emissions. For many entities, Scope 3 emissions represent by far the largest portion of their Greenhouse Gas (GHG) emissions. Scope 3 emissions data can help users of general purpose financial reports evaluate the broader risks which an entity may face in making the transition to a low-carbon economy. Thus, the measurement and disclosure of Scope 3 GHG emissions enables an entity and its investors to obtain greater insight into an entity's exposure to climate-related risks and opportunities in the value chain.

By providing a more complete picture of an entity’s carbon footprint, disclosure of material Scope 3 emissions, coupled with clear explanations of methodology and assumptions, can significantly increase the transparency of reporting, inform investment decisions and help direct the flow of capital towards more sustainable projects and activities. Scope 3 emissions disclosures by businesses will also aid financial institutions in understanding their financed emissions and evaluating their exposure to carbon-related risks.

We acknowledge that challenges exist in measuring Scope 3 emissions. There are difficulties in obtaining data, and methodologies for calculating these emissions using estimates can be inherently uncertain. However, we believe that the benefits of disclosing material Scope 3 emissions in line with the requirements of IFRS S2 Climate-related Disclosures significantly outweigh the costs.

As set out in our response to the UK Sustainability Disclosure Technical Advisory Committee’s (UK SDTAC’s) call for evidence on the UK endorsement of IFRS S1 and IFRS S2, we firmly support adoption of the International Sustainability Standards Board (ISSB) standards in the UK without modification, to the fullest extent possible – in other words, including the requirement to report material Scope 3 emissions, and using the GHG Protocol to do so. We believe this will support the establishment of a consistent and comparable global baseline for the reporting of decision-useful sustainability information which will improve transparency and encourage better informed pricing and capital allocation, building a more resilient economy in view of the wide-ranging sustainability-related risks companies face today.

We believe that the implementation of the ISSB standards in the UK presents an opportunity to carry out a thorough review of existing non-financial and sustainability reporting scoping and requirements, including the Streamlined Energy and Carbon Reporting (SECR) Regulations, with the objective of creating an integrated, coherent, proportionate reporting framework which operates effectively across the UK economy. We strongly encourage DESNZ to work closely with the Department for Business and Trade (DBT), particularly in the context of DBT’s ongoing non-financial reporting review, to achieve this objective.

Our full comment letter is available here. 

The literature review identifies the skills required of professional accountants to provide services, educational strategies to develop these skills and educational challenges. The literature review also informed IFAC’s decision to make sustainability-related revisions to the International Education Standards, which are expected in Q2 2024.

Please click to access the press release and the literature review on the IFAC website.

New members will start on 1 January 2025 for a term of three years, renewable once for a further three years. For more information, please see the press release on the IFRS Foundation website.