The Discussion paper introduces possible improvements to the information companies report about acquisitions of businesses to help investors assess how successful those acquisitions have been. The Discussion Paper also seeks feedback on how companies should account for goodwill arising from such transactions.

In its final comment letter, the UK Endorsement Board’s secretariat:

• Proposes a mixed model for accounting for goodwill, in which an annual amortisation charge is supported by indicator-based impairment testing.
• Suggests possible methods for establishing the useful life of goodwill in the amortisation calculation.
• Supports moving to an indicator-only impairment model for goodwill only if amortisation is reintroduced.
• Seeks further stakeholder input on anticipated cost savings of moving to an indicator-only impairment test for goodwill.
• Supports the IASB’s proposed simplifications to the impairment test and makes additional recommendations to reduce risks of shielding and management optimism.
• Supports the principle of improved disclosures on acquisitions but recommends the IASB undertake illustrative examples and field-testing.

For more information, see the response letter on the UKEB's website.  A feedback statement summarising the main comments received by the UKEB and how those views were reflected in the final comment letter submitted to the IASB is available on the UKEB website here.

We support the proposals related to the streamlining of filing of financial information. There are clear potential efficiencies to be gained through the transformative use of technology, and we are supportive of the move towards digital corporate reporting in the UK. We note that the proposals in this paper overlap in several instances with broader considerations raised in the Financial Reporting Council’s (FRC’s) recent discussion paper on the Future of Corporate Reporting. There is also overlap with HMRC’s current consultation regarding Making Tax Digital (MTD) for corporation tax in the context of digital filing of financial information. We believe it is essential for BEIS to liaise with both HMRC and the FRC in this regard, especially with regard to proposals for streamlined digital filing and continued use of size thresholds. In particular this represents an opportunity to simplify the existing size regime and to consider whether the information currently filed meets the needs of stakeholders.

However, we have significant concerns around the proposal to shorten filing deadlines to three months for public companies. A three-month deadline for public companies would create considerable practical and logistical challenges given the substantial amount of work required to prepare, have audited and approve a public company annual report. It seems unlikely that a shorter filing deadline would improve the quality of reporting and could in fact result in poorer quality if processes are condensed into a tighter timeframe. We consider that four months would be more acceptable, consistent with the requirements of Chapter 4 of the Financial Conduct Authority (FCA)’s Disclosure Guidance and Transparency Rules (DTR).

We also believe that any shorter filing deadline should apply only to those companies in the public interest, rather than to all public limited companies, and recommend that this be aligned to the outcome of the forthcoming government consultation on the definition of a Public Interest Entity (PIE).

Finally, given both the timing and the short duration of the consultation period, we are concerned that businesses may not have the opportunity to respond and recommend that BEIS seek further feedback before implementing any of the changes proposed.

The full response is contained within the full comment letter.

During the meeting, the IASB will discuss the following:

• Financial in­stru­ments with char­ac­ter­is­tics of equity
• Management commentary
• Agenda consultation
• Disclosure initiative — Subsidiaries that are SMEs
• SME Standard review and update
• Extractive 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 Committee discussed the feedback on one tentative agenda decision and two new issues.

Agenda decision to finalise

IFRS 10 Consolidated Financial Statements and IFRS 16 Leases—Sale and Leaseback of an Asset in a Single-asset Entity: In September 2020, the Committee discussed the applicability of the sale and leaseback requirements in IFRS 16 to a transaction in which an entity sells its equity interest in a subsidiary that holds only a real estate asset and then leases that real estate asset back. The staff concluded that IFRS 10:25 and B97-B99 apply to the accounting for the loss of control of the subsidiary and IFRS 16:100(a) applies for measuring of the right of use (ROU) asset and the gain on the leaseback arrangement. However, in this meeting, most of the Committee members considered the requirements in IFRS Standards do not provide an adequate basis to support the analysis and conclusion in more complex situations. Therefore, the Committee decided to propose a narrow-scope standard setting project to the Board.

New issues

IAS 2 Inventories—Cost necessary to sell inventories: The Committee members generally agreed that the costs to include as part of the estimated costs necessary to make the sale when determining the net realisable value of inventories should not be limited  to incremental costs but should include other costs necessary to make the sale. Consequently, the Committee decided not to add the matter to the Committee’s standard-setting agenda but publish a tentative agenda decision.

IAS 10 Events after the Reporting Period—Preparation of Financial Statements when an Entity is No Longer a Going Concern: The Committee concluded that the financial statements for all prior periods which had not been issued could not be prepared on a going concern basis if it intends to liquidate the entity subsequently. The Committee did not analyse the issue of restatement of comparative information in respect of the preceding period given the issue is not widespread.

The Committee agreed with the staff’s recommendation not to add the matter to the Committee’s standard-setting agenda as the matter is not widespread and there is no evidence of diversity in practice.

More Information

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

IFRS 16 and COVID-19: The amendments to IFRS 16 the IASB made in relation to rent concessions and COVID-19 provide a practical expedient that applied to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021. The Board decided to publish a proposal to amend IFRS 16 to extend that expedient to 30 June 2022. The Board decided that the amendments should be applied retrospectively. One Board member plans to dissent. The proposals will have a 14-day comment period. The staff think they can publish final amendments by the end of March 2021.

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

A recording of the webinar is now available. It can be accessed here on the IASB website.

A recording of the webinar is now available. It can be accessed here on the IASB website.

The guidance will apply to the unique sector-specific aspects of the annual general purpose financial reports, considering accounting issues as well as narrative reports that accompany financial statements. It will improve the clarity and consistency of non-profit organisations' financial reports, resulting in greater credibility and trust in the not-for-profit sector globally. The International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board (IPSASB) are aware and actively observing the development process.

The consultation paper has two parts:

• PART 1: General NPO financial reporting issues
• PART 2: NPO-specific financial reporting issues

Comments on part 1 are requested by 30 July 2021, on part 2 by 24 September 2021.

Please click for the following additional information on the IFR4NPO website:

• Access to the consultation paper (note that the paper is also available in Spanish, French and Arabic at the end of the page)
• Press release

Among other conditions, the 2020 amendments to IFRS 16 permits a lessee to apply the practical expedient only to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021. Stakeholders have pointed out, however, that the ongoing significance and protracted effects of the pandemic were not envisaged at the time the Board developed the practical expedient, as in many jurisdictions the ongoing effects of the pandemic are at least as significant now as they were in May 2020.

The IASB followed this line of argument and decided to propose to extend the relief to reductions in lease payments originally due on or before 30 June 2022 (with one Board member dissenting). The exposure draft to be published will propose retrospective application, which means that a lessee who has applied the initial expedient might possibly be required to reverse lease modification accounting for rent concessions that did not qualify because of the original time limit.

Given the urgency of the matter and with permission of the Trustees, the exposure draft will have a 14-day comment period. Final amendments are expected by the end of March 2021.

The webinars run for approximately 60 minutes and consisted of an overview of the standard’s objectives and related research opportunities, followed by questions and answers.

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