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New and revised pronouncements as at 30 June 2021

12 Jul, 2021

Our popular summary of new and revised financial reporting requirements, updated for financial reporting periods ending on 30 June 2021. This listing can be used to perform a quick check that new financial reporting requirements such as new and revised accounting standards and interpretations, and amendments to standards and interpretations, have been fully considered in the reporting close process.

The information below reflects developments to 8 September 2021 and will be updated through to 30 September 2021 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 30 June 2021. For accounts approved after September 2021, please also refer to subsequent versions of this document for any new and revised IFRS Standards that have additionally been issued that might require disclosure in the accounts under IAS 8:30.

The information below is organised as follows:

Summary

COVID-19 accounting considerations
Below is our usual analysis of new and amended standards, however, we are also aware that most, if not all, entities will have been impacted by the COVID-19 events. Please see our Need to know — Accounting considerations related to the Coronavirus 2019 Disease highlighting some of the key issues to be considered by the entities in preparing their financial statements and our UK Accounting Plus resource page on accounting considerations related to COVID-19. We additionally have a UK Accounting Plus collections page which includes all of our news and publications related to COVID-19.

The table below provides a summary of the pronouncements which will be mandatorily applied by UK entities for the first time at 30 June 2021, for various quarterly reporting periods. Where a UK entity chooses to prepare financial statements in accordance with IFRS Standards as issued by the IASB, as well as in compliance with IFRS Standards as adopted in conformity with the requirements of the Companies Act 2006, that entity should comply with the earlier IASB effective date for those items.

  • For accounting periods beginning on or after 1 January 2021, UK companies required or choosing to apply IFRS Standards will need to comply with UK-adopted IFRS Standards rather than EU-adopted IFRS Standards.
  • For accounting periods beginning prior to 1 January 2021, UK companies required or choosing to apply IFRS Standards must still prepare their financial statements in accordance with EU-adopted IFRS Standards. However, companies whose financial year spans 31 December 2020, and those whose filing deadline falls after 31 December 2020 but whose accounts have not been filed before 31 December 2020, may opt to apply any new IFRS Standards adopted by the UK in addition to EU-adopted IFRS Standards as at 31 December 2020.
  • For accounting periods beginning prior to 1 January 2021, if the entity has transferable securities admitted to trading on a UK regulated market, is required to produce consolidated accounts and is preparing accounts to satisfy DTR requirements, those accounts must additionally be prepared in accordance with IFRS Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. This means that EU adoption of IFRS Standards subsequent to 31 December 2020 remains relevant for such entities.

Further information on IFRS Standards in the UK is available here.

The table below provides a summary of these pronouncements, and which reporting periods they apply to:

Pronouncement IASB Effective date* EU/UK effective date* UK Mandatory at 30 June 2021?
1st qtrs.** 2nd qtrs.*** 3rd qtrs.**** Full yrs*****
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
 1 January 2018 1 January 2018 Optional ~ Optional ~ Optional ~ Optional ~
Amendments to References to the Conceptual Framework in IFRS Standards 1 January 2020 1 January 2020 Already applied in prior year (April 2020) Already applied in prior year (Jan 2020 Yes Yes
Definition of Material (Amendments to IAS 1 and IAS 8) 1 January 2020 1 January 2020 Already applied in prior year (April 2020 Already applied in prior year (Jan 2020 Yes Yes
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) 1 January 2020 1 January 2020 Already applied in prior year (April 2020) Already applied in prior year (Jan 2020 Yes Yes
Definition of a Business (Amendments to IFRS 3) 1 January 2020 1 January 2020 Already applied in prior year (April 2020 Already applied in prior year (Jan 2020 Yes Yes
Covid-19-Related Rent Concessions (Amendment to IFRS 16) 1 June 2020 1 June 2020 Yes Yes Yes Yes
Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) 1 January 2021 1 January 2021 Yes Yes No No
Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) 1 April 2021 1 April 2021 Yes No No No

* Generally annual reporting periods beginning on or after the date indicated, may only apply to first-time adopters in some limited cases (see below for full details).

** 1st quarter ending on 30 June 2021 (accounting period began on 1 April 2021).

*** 2nd quarter ending 30 June 2021 (accounting period began 1 January 2021).

**** 3rd quarter ending 30 June 2021 (accounting period began 1 October 2020).

***** 4th quarter ending 30 June 2021 (accounting period began 1 July 2020).

~ The application of both approaches (overlay approach/ deferral approach) is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.

More information about these pronouncements, and all new and revised pronouncements, is set out below.

Financial statement considerations in adopting new and revised pronouncements

Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:

  • Updates to accounting policies. The terminology and substance of disclosed accounting policies may need to be updated to reflect new recognition, measurement and other requirements, e.g IAS 19 Employee Benefits may impact the measurement of certain employee benefits.
  • Impact of transitional provisions. IAS 8 Accounting Policies, Changes in Estimates and Errors contains a general requirement that changes in accounting policies are retrospectively applied, but this does not apply to the extent an individual pronouncement has specific transitional provisions.
  • Disclosures about changes in accounting policies. Where an entity changes its accounting policy as a result of the initial application of an IFRS and it has an effect on the current period or any prior period, IAS 8 requires the disclosure of a number of matters, e.g. the title of the IFRS, the nature of the change in accounting policy, a description of the transitional provisions, and the amount of the adjustment for each financial statement line item affected
  • Third statement of financial position. IAS 1 Presentation of Financial Statements requires the presentation of a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements in a number of situations, including if an entity applies an accounting policy retrospectively and the retrospective application has a material effect on the information in the statement of financial position at the beginning of the preceding period
  • Earnings per share (EPS). Where applicable to the entity, IAS 33 Earnings Per Share requires basic and diluted EPS to be adjusted for the impacts of adjustments result from changes in accounting policies accounted for retrospectively and IAS 8 requires the disclosure of the amount of any such adjustments.

Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation.

 

New or revised standards

The information below can be used to assist with the disclosure requirements under paragraph 30 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which requires entities to disclose any new IFRS Standards that are in issue but not yet effective and which are likely to impact the entity

New or revised pronouncement Effective date

UK Application at 30 June 2021 to:
1st qtrs 2nd qtrs 3rd qtrs Full yrs

IFRS 17 Insurance Contracts

IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 Insurance Contracts as of 1 January 2021.

Issued: 18 May 2017 (Summary of IFRS 17, Article, Newsletter).

Applicable to annual reporting periods beginning on or after 1 January 2023. The original effective date of IFRS 17 of 1 January 2021 was amended by Amendments to IFRS 17 issued by the IASB in June 2020.

Not yet endorsed for use in the EU or the UK.

Amendments

New or revised pronouncement When effective UK Application at 30 June 2021 to:
1st qtrs 2nd qtrs 3rd qtrs Full yrs

Editorial Corrections (various)

The IASB periodically issues Editorial Corrections and changes to IFRSs and other pronouncements. Since the beginning of calendar 2012, such corrections have been made in February 2012, July 2012, March 2013, September 2013, November 2013 and March 2014, September 2014, December 2014, March 2015, April 2015, September 2015, December 2015, March 2016, May 2016, September 2016, December 2016, September 2017, November 2017, December 2018, March 2019, May 2019, December 2019, July 2020, September 2020, October 2020, November 2020 and June 2021.

Note: For details of these editorial corrections, see our IASB editorial corrections page.

 As minor editorial corrections, these changes are effectively immediately applicable under IFRS See comment in previous column
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4:
  • an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
  • an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.
The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
Issued: 12 September 2016 (article, newsletter)

Overlay approach to be applied when IFRS 9 is first applied. Deferral approach effective for annual periods beginning on or after 1 January 2018.

In June 2020 the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) which changes the fixed expiry date for the temporary exemption (the deferral approach) in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.

 

Optional

Optional

Optional

Optional

Amendments to References to the Conceptual Framework in IFRS Standards


Together with the revised Conceptual Framework published in March 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the framework they are referencing to (the IASC framework adopted by the IASB in 2001, the IASB framework of 2010, or the new revised framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework.

Issued: 29 March 2018 (article)

Annual periods beginning on or after 1 January 2020

Already applied in prior year (April 2020)

Already applied in prior year (January 2020)

Mandatory

Mandatory

Definition of a Business (Amendments to IFRS 3)

The amendments in Definition of a Business (Amendments to IFRS 3) are changes to Appendix A Defined terms, the application guidance, and the illustrative examples of IFRS 3 only. They:

  • clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;
  • narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;
  • add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;
  • remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and
  • add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

Issued: 22 October 2018 (article/newsletter)


Business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020

Already applied in prior year (April 2020)

Already applied in prior year (January 2020)

Mandatory

Mandatory

Definition of Material (Amendments to IAS 1 and IAS 8)

The amendments in Definition of Material (Amendments to IAS 1 and IAS 8) clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards.

Issued: 31 October 2018 (article)

 

Annual reporting periods beginning on or after 1 January 2020

Already applied in prior year (April 2020)

Already applied in prior year (January 2020)

Mandatory

Mandatory

Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)

The amendments in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) clarify that entities would continue to apply certain hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform.

Issued: 26 September 2019 (article)

Annual reporting periods beginning on or after 1 January 2020

Already applied in prior year (April 2020)

Already applied in prior year (January 2020)

Mandatory

Mandatory

Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)

Extends, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification

The Changes in Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) amend IFRS 16 to

  • permit a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021);
  • require a lessee applying the amendment to do so for annual reporting periods beginning on or after 1 April 2021;
  • require a lessee applying the amendment to do so retrospectively, recognising the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment; and
  • specify that, in the reporting period in which a lessee first applies the amendment, a lessee is not required to disclose the information required by paragraph 28(f) of IAS 8.

Issued: 31 March 2021 (article)

The amendment is effective for annual reporting periods beginning on or after 1 April 2021 (earlier application permitted, including in financial statements not yet authorised for issue at the date the amendment is issued).

Endorsed for use by the UK but not yet endorsed for use in the EU.

Mandatory - endorsed by both the EU and UK.

Optional - Endorsed by both the UK and EU.

Optional - Endorsed by both the UK and EU.

Optional - Endorsed by both the UK and EU.

Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current

Issued: 23 January 2020 (article)

Annual reporting periods beginning on or after 1 January 2023 (see 'Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)' below). Original effective date 1 January 2022.

Not yet endorsed for use in the EU or the UK.

 

 

 

 

Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)

The amendments amend IAS 16 to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.

Issued: 14 May 2020 (article, newsletter)

Annual reporting periods beginning on or after 1 January 2022
Endorsed for use in the EU but not in the UK.

Annual Improvements 2018-2020 Cycle

Makes amendments to the following standards:

  • IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a first-time adopter. The amendment permits a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.
  • IFRS 9 Financial Instruments - Fees in the ‘10 per cent’ test for derecognition of financial liabilities. The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
  • IFRS 16 Leases - Lease incentives. The amendment to Illustrative Example 13 accompanying IFRS 16 removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.
  • IAS 41 Agriculture - Taxation in fair value measurements. The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique. This will ensure consistency with the requirements in IFRS 13.

Issued: 14 May 2020 (article, newsletter)

The amendments to IFRS 1, IFRS 9, and IAS 41 are all effective for annual periods beginning on or after 1 January 2022. Early application is permitted. The amendment to IFRS 16 only regards an illustrative example, so no effective date is stated.

Endorsed for use in the EU but not in the UK.

Reference to the Conceptual Framework (Amendments to IFRS 3)

The changes:

  • update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework;
  • add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and
  • add to IFRS 3 an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.

Issued: 14 May 2020 (article, newsletter)

The amendments published today are effective for annual periods beginning on or after 1 January 2022. Early application is permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier

Endorsed for use in the EU but not in the UK.

Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)

The changes specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).

Issued: 14 MAy 2020 (article, newsletter)

Annual reporting periods beginning on or after 1 January 2022.  Endorsed for use in the EU but not in the UK.

Covid-19-Related Rent Concessions (Amendment to IFRS 16)

Amends IFRS 16 to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification.

The changes:

  • provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification;
  • require lessees that apply the exemption to account for COVID-19-related rent concessions as if they were not lease modifications;
  • require lessees that apply the exemption to disclose that fact; and
  • require lessees to apply the exemption retrospectively in accordance with IAS 8, but not require them to restate prior period figures.

The practical expedient applies to COVID-19-related rent concessions that result in reduction in lease payments due on or before 30 June 2021.

Issued: 28 MAy 2020 (article,newsletter)

 

The amendment is effective for annual reporting periods beginning on or after 1 June 2020.

 

Mandatory

Mandatory

Mandatory

Mandatory

Amendments to IFRS 17

Amends IFRS 17 to address concerns and implementation challenges that were identified after IFRS 17 Insurance Contracts was published in 2017.

The main changes are:

  • Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning on or after 1 January 2023
  • Additional scope exclusion for credit card contracts and similar contracts that provide insurance coverage as well as optional scope exclusion for loan contracts that transfer significant insurance risk.
  • Recognition of insurance acquisition cash flows relating to expected contract renewals, including transition provisions and guidance for insurance acquisition cash flows recognised in a business acquired in a business combination.
  • Clarification of the application of IFRS 17 in interim financial statements allowing an accounting policy choice at a reporting entity level.
  • Clarification of the application of contractual service margin (CSM) attributable to investment-return service and investment-related service and changes to the corresponding disclosure requirements.
  • Extension of the risk mitigation option to include reinsurance contracts held and non-financial derivatives.
  • Amendments to require an entity that at initial recognition recognises losses on onerous insurance contracts issued to also recognise a gain on reinsurance contracts held.
  • Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts.
  • Additional transition relief for business combinations and additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach.
  • Several small amendments regarding minor application issues.

Issued: 25 June 2020 (article)

 

The amendment is effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted.

Not yet endorsed for use in the EU or the UK.

Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)

The amendment changes the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.

Issued: 25 June 2020 (article)

In June 2020 the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) which changes the fixed expiry date for the temporary exemption (the deferral approach) in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.

Optional

Optional

Optional

Optional

'Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)'

The amendment defers the effective date of the January 2020 amendments (see above) by one year.

Issued: 15 July 2020 (article)

 

The changes in Classification of Liabilities as Current or Non-current — Deferral of Effective Date defer the effective date of Classification of Liabilities as Current or Non-current (Amendments to IAS 1) to annual reporting periods beginning on or after 1 January 2023. Earlier application of the January 2020 amendments continue to be permitted.

Not yet endorsed for use in the EU or the UK.

Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The amendments in Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) introduce a practical expedient for modifications required by the reform, clarify that hedge accounting is not discontinued solely because of the IBOR reform, and introduce disclosures that allow users to understand the nature and extent of risks arising from the IBOR reform to which the entity is exposed to and how the entity manages those risks as well as the entity’s progress in transitioning from IBORs to alternative benchmark rates, and how the entity is managing this transition.

Issued: 27 August 2020 (article)

 

Annual reporting periods beginning on or after 1 January 2021.

Mandatory - endorsed by both the EU and UK.

Mandatory - Endorsed by both the UK and EU.

Optional - Endorsed by both the UK and EU.

Optional - Endorsed by both the UK and EU.

Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)

The amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the Board has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.

Issued: 12 February 2021 (article)

Annual reporting periods beginning on or after 1 January 2023. Not yet endorsed for use in the EU or the UK.

 

 

 

 

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)

The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations.

The amendments provide an exemption from the initial recognition exemption provided in IAS 12.15(b) and IAS 12.24. Accordingly, the initial recognition exemption does not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that result in the recognition of equal deferred tax assets and liabilities.

Issued: 7 May 2021 (article)

Annual reporting periods beginning on or after 1 January 2023. Not yet endorsed for use in the EU or the UK.

Definition of Accounting Estimates (Amendments to IAS 8)

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The amendments clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error.

Issued: 12 February 2021 (article)

 

 

Annual reporting periods beginning on or after 1 January 2023. Not yet endorsed for use in the EU or the UK.

 

 

 

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ESMA updates ESEF reporting manual

12 Jul, 2021

The European Securities and Markets Authority (ESMA) has published an update of its European Single Electronic Format (ESEF) Reporting Manual. The manual is aimed at all market participants involved in the implementation of the requirements set out in the ESEF Regulation.

The 2021 update is available in a clean version and a version with track changes (both links to the ESMA website).

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G20 Finance Ministers and Central Bank Governors support FSB roadmap, welcome IFRS Foundation Trustees sustainability initiative

10 Jul, 2021

The G20 Finance Ministers and Central Bank Governors met in Venice on 9-10July 2021. Their final communiqué also comments on sustainability reporting.

The communique notes that the Finance Ministers and Central Bank Governors welcome the FSB report on promoting globally consistent, comparable and reliable climate-related financial disclosures and its recommendations. They stress that they will work to promote implementation of disclosure requirements or guidance, building on the FSB’s Task Force on Climate-related Financial Disclosures (TCFD) framework, in line with domestic regulatory frameworks, to pave the way for future global coordination efforts, taking into account jurisdictions’ circumstances, aimed at developing a baseline global reporting standard. The communiqué notes:

To that aim, we welcome the work programme of the International Financial Reporting Standards Foundation to develop a baseline global reporting standard under robust governance and public oversight, building upon the TCFD framework and the work of sustainability standard-setters, involving them and consulting with a wide range of stakeholders to foster global best practices.

The G20 Finance Ministers and Central Bank Governors expressly welcome the FSB roadmap for addressing financial risks from climate change submitted to them on 7 July 2021.

Please click to access the full communiqué on the G20 website.

The IFRS Foundation has responded to the Communiqué and has published on its website a statement by Erkki Liikanen, Chair of the IFRS Foundation Trustees.

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July 2021 IASB meeting agenda posted

10 Jul, 2021

The IASB has posted the agenda for its next meeting, which will be held via video conference on 20–23 July 2021. One day of the meeting will be a joint education session with the FASB.

During the meeting, the IASB will discuss the following:

  • Post-implementation review of IFRS 9
  • Maintenance and consistent application
  • Goodwill and impairment
  • Post-implementation review of IFRS 10-12
  • Taxonomy — Proposed IFRS Taxonomy Update 2021
  • Disclosure initiative — Targeted standards-level review of disclosures
  • Primary financial statements

Together with the FASB, the IASB will discuss the following:

  • Supply chain financing
  • Agenda consultation
  • Goodwill and impairment

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.

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Summary of the June 2021 joint CMAC-GPF meeting

09 Jul, 2021

Representatives from the International Accounting Standards Board (IASB) met with both the Capital Markets Advisory Council (CMAC) and Global Preparers Forum (GPF) by video conference on 10-11 June 2021. Notes and recordings from the joint meeting have now been released.

The topics discussed at the meeting included:

  • Agenda consultation
  • Targeted standards-level review of disclosures
  • Management commentary
  • IASB Update
  • Update on the IFRS Foundation Trustees' project on sustainability reporting

The meeting summary is available on the IASB website. In addition, the meeting page offers recordings of all topics.

The next CMAC meeting will be held on 11 November 2021. The next GPF meeting is proposed to be held on 12 November 2021.

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The Pensions Regulator consults on draft guidance on governance and reporting of climate-related risks and opportunities

09 Jul, 2021

The Pensions Regulator (TPR) has published a consultation on proposed new guidance to assist trustees in meeting tougher standards of governance in relation to climate change risks and opportunities.

From 1 October 2021, trustees of certain schemes face new requirements intended to improve the quality of governance and reporting as they address climate-related risks and opportunities. 

TPR's proposed guidance describes what trustees will need to do and report on in order to comply with the new legislation.  The consultation also includes a proposed new appendix to TPR's monetary penalties policy which outlines its proposed approach to imposing penalties for non-compliance with the new regulations.

The proposed guidance complements and should be read alongside the Department for Work and Pension's (DWP's) statutory guidance (link to guidance) which Trustees of occupational pension schemes must have regard to when meeting requirements under the proposed new regulations.  Additionally trustees should refer to the non-statutory guidance (link to DWP website) issued by the Pensions Climate Risk Industry Group (PCRIG). This is non-mandatory guidance but might be helpful for trustees to consider in addition to the statutory guidance which must be followed.

The consultation closes on 31 August 2021 and can be accessed from The Pensions regulator website.

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    Accountancy Europe comments on ways to address the climate emergency

    09 Jul, 2021

    Accountancy Europe has provided feedback on the proposed EU Corporate Sustainability Reporting Directive (CSRD) and has released a publication on cooperation in sustainability reporting standard-setting.

    On the draft CSRD, Accountancy Europe notes that common standards for sustainability reporting need to be set quickly as such European standards will also provide the necessary basis for digitisation and assurance. However, Accountancy Europe emphasises the need for coordination of the different sustainability reporting initiatives:

    It is important for the EC to build on globally accepted standards and contribute to international convergence, especially with the IFRS Foundation’s global sustainability reporting standards in development. Ultimately, consolidated global standards would be best to meet investors’ and capital markets’ needs for information comparability whilst minimising duplications and unnecessary costs.

    The same argument is brought forward in Accountancy Europe's newly released publication A constructive two-way cooperation to Sustainability reporting standard-setting. The publication notes that EFRAG and the IFRS Foundation should coordinate and work together as early as possible to produce aligned standards and to avoid duplications and unnecessary costs. It states:

    The EC, EFRAG, and the IFRS Foundation with its International Accounting Standards Board (IASB) have been working together on the financial reporting agenda since 2002. As EFRAG is now expanding its role to standard-setting, this cooperation should be extended to sustainability reporting standard-setting.

    Please click to access the following information on the Accountancy Europe website:

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    EFRAG update on the development of draft EU sustainability reporting standards

    09 Jul, 2021

    The European Financial Reporting Advisory Group (EFRAG) has published an update on current developments regarding EU sustainability reporting standards (ESRS). As one of the developments, EFRAG and the Global Reporting Initiative (GRI) have signed a Statement of Cooperation.

    In addition, the press release on recent developments contains a list of the members of the Project Task Force for beginning with the development of standards (renamed PTF-ESRS) and a list of the members of a Secretariat set up in order to provide technical expertise, project management and drafting input.

    Please click for the following additional information:

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    Comments invited on updated draft SORP for Limited Liability Partnerships

    08 Jul, 2021

    The Consultative Committee of Accountancy Bodies (CCAB) has published an updated draft of its Limited Liability Partnerships (LLPs) Statement of Recommended Practice (SORP). Comments are invited until 24 September 2021.

    The Financial Reporting Council (FRC) has approved the CCAB as the recognised SORP-making body for issuing a recognised SORP for LLPs incorporated in Great Britain under the Limited Liability Partnerships Act 2000. The members of the CCAB are; The Institute of Chartered Accountants in England and Wales (ICAEW), The Institute of Chartered Accountants of Scotland (ICAS), The Institute of Chartered Accountants in Ireland (ICAI), The Association of Chartered Certified Accountants (ACCA) and The Chartered Institute of Public Finance and Accountancy (CIPFA).  

    SORPS issued by CCAB apply to LLPs preparing accounts under UK GAAP to present a ‘true and fair view’.  CCAB has stated that “the underlying purpose of the SORP is to deal with issues that are specific to LLPs and ensure that, as far as possible, LLPs present financial statements that are comparable with those of other entities”. 

    Updates to the LLPs SORP are proposed in response to stakeholder feedback that there is diversity in practice when interpreting whether a division of profit is automatic or discretionary in certain situations. As a result of this review CCAB is proposing:

    • Changes to the definitions included in the SORP relating to divisions of profit.
    • Further consequential amendments throughout the SORP to ensure consistency of terminology.
    • Additional guidance to help determine when an LLP has an unconditional right to avoid delivering cash or other assets to members.
    • Changes to the ordering of the SORP to ensure that the guidance on the division of profits is presented together, reduce duplication, and improve the overall flow of the document.

    CCAB has also identified some diversity in practice regarding how automatic and discretionary divisions of profit are presented in the cash flow statement. To address this diversity, CCAB is proposing:

    • Additional guidance which sets out the basis for alternative classifications of cash flows relating to profit distributions.
    • A requirement for LLPs to disclose their accounting policy for classifying share of profits in the cash flow statement and that cash flows be classified consistently from period to period.

    A number of other minor clarifications to the SORP are also being proposed including updates to reflect the requirement for large LLPs and groups to produce an energy and carbon report as part of their annual report.  CCAB is also in the process of considering whether amendments made to FRS 102 as a result of the UK's exit from the European Union require changes to the SORP. 

    The updated SORP will be effective for accounting periods beginning on or after 1 January 2022, with early adoption permitted.

    Click for (all links to CCAB website):

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    FSB roadmap for addressing climate-related financial risks

    08 Jul, 2021

    The Financial Stability Board (FSB) has submitted to the G20 Finance Ministers and Central Bank Governors for endorsement a comprehensive roadmap to address climate-related financial risks. The roadmap outlines the work underway and still to be done by standard-setting bodies and other international organisations over a multi-year period.

    The roadmap, which is accompanied by several document, including a report on promoting climate-related disclosures, notes that the goal of international initiatives in the area of financial disclosures must be to achieve globally consistent, comparable, and decision-useful public disclosures by firms of their climate-related financial risks. To further this overall goal, establishing international standards is important, including accommodating interoperability between a global baseline of international standards and national and regional jurisdiction-specific requirements. Therefore, the FSB welcomes the IFRS Foundation’s programme of work to develop a baseline global sustainability reporting standard under robust governance and public oversight, built from the TCFD framework and the work of an alliance of sustainability standard-setters, involving them and a wider range of stakeholders closely, including national and regional authorities.

    The FSB surveyed its members in the first half of 2021 to explore national/regional practices (current or planned) of financial authorities on promoting climate-related disclosures. The survey responses indicated that most jurisdictions strongly support the development of a common global baseline of international reporting standards on climate, with many referencing the ongoing work of the IFRS Foundation. They also signalled that international coordination on requirements to climate-related disclosures is critical and that regulatory and supervisory fragmentation must be prevented.

    The roadmap notes that the FSB can play an important role in global coordination, including promoting adoption of the anticipated international reporting standards developed by the ISSB, once developed and if endorsed, as a global baseline. Such internationally agreed standards for disclosures as a global baseline would not preclude authorities from going further or at a faster pace in their jurisdictions. The FSB states that it will continue to act as an international forum for sharing experiences across jurisdictions, promoting best practices, and contribute to discussions in other international fora (such as through COP26 and G7 / G20 meetings) and will continue to support the IFRS Foundation’s work to develop a proposal for a baseline global sustainability reporting standard under robust governance and public oversight. As part of this work, the FSB encourages the IFRS Foundation to address the connectivity between proposed sustainability reporting standards to be developed by the ISSB and existing financial accounting standards. Conditional on the endorsement of this standard, the FSB will encourage FSB member jurisdictions to consider the ISSB’s standard for use for cross-border purposes and when setting sustainability-related disclosure requirements, within the context of individual jurisdictions’ regulatory and legal requirements and in a way that promotes consistent and comparable sustainability disclosures across jurisdictions.

    The actions and deliverables are described in detail in the roadmap with an indicative timeline for each of these actions and deliverables provided in tabular format on page 12 of the document. Please click for the following additional information on the FSB website:

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