The two boards informed each other about their respective activities and exchanged views on technical topics in which they both have an interest, including accounting for goodwill and accounting for financial instruments.

The next meeting between the FASB and ASBJ is expected to be held in the first half of 2022. For more information about the latest meeting, see the press release on the ASBJ website.

The topics discussed at the meeting were:

• update on work completed;
• proposals relating to the Conceptual Framework and to financial instruments;
• alignment with IFRS 16 Leases;
• Section 28 of the IFRS for SMEs Employee Benefits;
• update to multiple sections of the IFRS for SMEs for amendments to IFRSs and IFRIC Interpretations;
• alignment with IFRS 14 Regulatory Deferral Accounts;
• other topics; and
• subsidiaries without public accountability.

The report from the meeting is available on the IASB website.

The Board will discuss the following:

• Second comprehensive review of the IFRS for SMEs Standard
• Goodwill and impairment
• Post implementation review of IFRS 10–12
• Equity method
• Main­te­nance and con­sis­tent ap­pli­ca­tion
• Pensions benefits that depend on asset returns
• IFRS taxonomy due process
• Primary financial statements
• Amendments to IFRS 17
• Rate-regulated activities

The full agenda for the meeting 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.

The TCFD found that:

The TCFD has also published two additional documents: Guidance on Metrics, Targets, and Transition Plans to support preparers in disclosing decision-useful information and linking those disclosures with estimates of financial impacts and Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, which updates and replaces Implementing the Recommendations of the TCFD initially published in 2017.

Please click for the following additional information on the FSB website:

• Press release
• Status report 2021
• Guidance on metrics, targets, and transition plans
• Updated guidance on implementing the TCFD recommendations

The paper is a follow-up to the perspectives papers A Framework to Assess ESG Value Creation released in May 2021 and ESG and Business Valuation released in March 2021, which explore how ESG characteristics are, or can be, incorporated into the value measurement process.

Please click to access ESG and Real Estate Valuation on the IVSC website.

On 26 July 2021, the IASB issued the ED that would permit eligible subsidiaries that are small and medium-sized entities (SMEs) to apply IFRSs but with reduced disclosure requirements. Comments on the ED are due by 31 January 2022.

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

A sample of 20 companies' annual reports from a range of industry sectors were reviewed to determine how effectively they met the disclosure requirements and provided other relevant information.  Whilst the FRC found a number of instances of good reporting , it highlights that there is still room for improvement in several areas, in particular in:

• The disclosure of quantitative information on expected timing of future economic outflows (i.e the phasing of outflows that companies expect to see as they utilise their provisions), the key assumptions used to estimate those outflows, and the associated uncertainties.
• Describing the nature of the costs included in certain types of provision, for example acquisition and integration provisions.
• Disclosure of more specific accounting policies to include, for example the approach to recognising and measuring different provision classes.
• The provision of more quantitative information about contingent liabilities, for example giving an indication of both the timescale for obtaining greater certainty and the level of confidence that an economic outflow was less than probable but more than remote.

The FRC expects companies to consider the better disclosures in the report in the forthcoming reporting season.  It has identified that good disclosure should include all of the following, where material and relevant to the company's financial reporting:

• Concise and entity specific descriptions of the significant accounting policies adopted in respect of provisions and contingencies.
• Clear and specific descriptions of the nature of each material exposure, the timeframe over which it is expected to crystallise and the basis for determining the best estimate of the probable or possible outflow.
• Quantitative information about expected or maximum exposures to contingent liabilities, or a clear and justified statement that it is not practicable to provide an estimate of the financial effect; negative confirmation can be helpful where users may otherwise expect the company to report an exposure.
• ‘Indications of uncertainty’ in timing and/or amount that help users understand the potential financial effect (which may arise beyond the next financial year) of additional or reduced costs and/or earlier or later timing of outflows.
• Explanation of significant judgement exercised by management in determining the recognition and measurement of provisions, setting out the rationale for management’s conclusion and the effect on the financial statements of taking an alternative view.
• Quantitative and qualitative information about critical estimation uncertainty affecting the next financial year, including disclosure of key assumptions and sensitivities.
• Management commentary on significant year end balances and unrecognised exposures, and on significant movements recognised during the period (whether additions, new provisions, utilisations or reversals).

A press release and the full publication are available on the FRC website.  A webinar to discuss the report will be held on October 20.  A press release including details of how to register for the webinar is available on the FRC website.  

The agenda for the DPOC meeting is summarised below.

Agenda papers for the meeting are available on the IASB's website.

​EFRAG considers that the overall balance of the activities of the IASB is generally appropriate and should not be substantially modified over the 2022–2026 period.

EFRAG further suggests the the IASB identifies a separate area of its activity to address the connectivity between financial reporting and sustainability reporting and increases the resources devoted to digital reporting. 

EFRAG considers that the priorities for the IASB should be to focus on finalising projects in its active work plan and conducting on a timely basis the Post-implementation Reviews (‘PIR’) of IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers, IFRS 16 Leases and, towards the end of the 2022-2026 period, IFRS 17 Insurance Contracts. 

EFRAG understands that there is only capacity to add a limited number of projects to the IASB's agenda and indicates that, when deciding which projects to add, the IASB should primarily rely on their relevance and urgency rather than the level of resources involved.  EFRAG identifies the following high priority projects for the IASB, ranked according to their priority:

• Intangibles;
• Sustainability in financial reporting, starting from climate (including connectivity and pollutant pricing mechanisms); and
• Crypto assets-liabilities.

In addition, EFRAG is of the view that the treatment of financial instruments with ESG features under IFRS 9 is an urgent and prevalent issue and requests the IASB to address this in the short term.

Other high priority projects identified by EFRAG are:

• Discontinued operations and disposal groups;
• Statement of cash flows and related matters; and
• Variable and contingent consideration.

EFRAG strongly encourages the IASB, in its research activities, to continue to build on the work of other organisations and create synergies.

Moreover, EFRAG considers that the seven criteria suggested in the RFI are useful and suggests that the IASB consider updating the Due Process Handbook to reflect them. 

The press release and the final comment letter are available on the EFRAG website. 

EFRAG welcomes the discussion paper and the IASB's efforts to explore possible reporting requirements for business combinations under common control (BCUCC) that would reduce diversity in practice, improve comparability and consistency of reporting and provide more relevant information for users of financial statements.

EFRAG considers that the scope of the project should be extended to include how to measure investments in subsidiaries in the separate financial statements. EFRAG observes that all other transactions under common control are important and need to be discussed in a future comprehensive project. EFRAG also makes further suggestions on defining the scope in order to ensure the appropriate application of the IASB’s proposals.

With regards to the selection of a measurement method, EFRAG agrees that a single measurement approach is not appropriate for all BCUCC transactions. EFRAG considers that establishing an appropriate dividing line between applying the acquisition method and a book-value method to BCUCC is crucial for achieving the project’s objectives.  It considers that the economic substance should be the key element for selecting the measurement method for BCUCC transactions.  Due to practical considerations, EFRAG acknowledges that the IASB’s proposed decision tree may offer a proxy to operationalise the decision about which measurement method to apply. However, EFRAG encourages the IASB to elaborate further, clarify and provide guidance on the notion of ‘affecting non-controlling shareholders’ (NCS) and explore the possibility of having a rebuttable presumption when applying this concept to select the relevant measurement method.  EFRAG also recommends that the IASB clarify and provide guidance on identifying the receiving company.

EFRAG considers that applying the acquisition method to BCUCC which affect the non-controlling shareholders of the publicly traded receiving company would produce more relevant information and that the book value method should be applied in all other BCUCC where the controlling party's ownership interest remains unchanged. 

EFRAG considers that additional guidance is needed to make the optional exemption from the acquisition method for privately-held entities workable in practice and considers that the related party exception should be optional rather than required. 

EFRAG’s consultation and outreach resulted in mixed views regarding recognition as a contribution to equity of the excess fair value of the identifiable net assets over the consideration paid when applying the acquisition method to BCUCC transactions. Consequently, EFRAG suggests that the IASB further explores the possible approaches in order to provide relevant information to users of financial statements.  Where consideration is in excess of the fair value of the identifiable acquired assets and liabilities (using the acquisition method) EFRAG suggests that this excess should be recognised as goodwill consistent with IFRS 3.

When applying a book-value method, EFRAG proposes two accounting policy options to allow the use of the carrying amounts in the consolidated financial statements of the transferred company’s controlling party and to provide pre-combination information retrospectively. 

With regards to disclosures, EFRAG considers that the proposed disclosure requirements for BCUCC accounted for under both the acquisition method and the book-value method would provide relevant information about the BCUCC transactions.

Finally, in its comment letter, EFRAG makes a number of recommendations to improve the IASB’s proposals.

The press release and the comment letter are available on the EFRAG website.