IAS 1 requires management to make an assessment of an entity's ability to continue as a going concern. If management has significant concerns about the entity's ability to continue as a going concern, the uncertainties must be disclosed. In the current stressed economic environment arising from the covid-19 pandemic, deciding whether the financial statements should be prepared on a going concern basis may involve a greater degree of judgement than usual.

For more information, see Deloitte's Need to know newsletter as well as the press release on the IASB’s website.

Xianzhong Li will represent the Chinese Ministry of Finance on the Council.

A press release announcing his appointment is available on the IASB website.

Each webinar will be offered once in the morning and once in the afternoon to accommodate stakeholders in different time zones. The webinars will last approximately 60 minutes and will consist of an overview of the standard’s objectives and related research opportunities, followed by questions and answers.

Please click for registration on the IASB website:

IFRS 9, Thursday 21 January 2021:

• Morning session (09:00-10:00 GMT)
• Afternoon session (15:00-16:00 GMT)

IFRS 16, Friday 22 January 2021:

• Morning session (09:30-10:30 GMT)
• Afternoon session (15:00-16:00 GMT)

IFRS 15, Monday 8 February 2021:

• Morning session (09:00-10:00 GMT)
• Afternoon session (15:00-16:00 GMT)

In doing so, HM Treasury has specified, in an Addendum, minimum reporting requirements as per the Financial Reporting Manual (FReM). Although specifying minimum requirements HM Treasury notes that such requirements do not replace the FReM but rather set out minimum financial reporting requirements. Entities may go beyond the minimum requirements where they are able to. The minimum requirements are in place for 2020-2021 only and only relate to non-audited parts of the annual report and accounts.

There are reduced reporting requirements in the performance report including the option of only producing the summary information in the performance overview as set out in paragraphs 5.3.1 – 5.3.3 of the FReM. This is instead of providing the performance analysis as set out in paragraphs 5.4.1 – 5.4.6 of the 2020-21 FReM. For 2020-21 there is also an option not to report against the sustainability reporting requirements as set out in paragraphs 5.4.8-5.4.12 of the 2020-21 FReM. Entities will be expected to include within their performance reports information regarding the impact of Brexit and COVID-19 on departmental activity and outcomes as well as core KPIs, linking these to the UN Sustainable Development Goals where relevant.

Within the accountability report, the only optional requirements relate to the Statement of Outturn against Parliamentary Supply (SoPS). Entities applying the FReM are no longer required to adhere to the comply or explain requirement in paragraph 6.6.7(b) of the 2020-21 FReM, that SoPS disclosures must follow the form of the illustrative disclosures. Entities are also permitted to omit the requirements set out in 6.6.8(d) in relation to supporting text and the presentation of figures in thousands in the SoPS.

There will be no change to the format and content of the financial statements which should continue to be published in line with the requirements of the 2020-21 FReM.

The Addendum is available on the HM Treasury website.

Update May 2021

In April 20201, HM Treasury published the results of an early review into the effectiveness of the reduced reporting requirements.  The review gathered feedback via a survey to the Resource Accounts Special Interest Group, qualitative feedback from departments and laying date data. Overall, preparers considered the guidance and measures offered were effective at reducing the financial reporting burden for their 2019-20 annual report and account preparation. HM Treasury will continue to monitor the effectiveness of the measures and guidance for the 2020-21 reporting period and will decide if further measures and guidance will be required in the future. 

The Strategic review of the HM Treasury's financial reporting response to COVID-19 is available on the HM Treasury website. 

The podcast covers the Lab's work on reporting in times of uncertainty, including tips for section 172 statements and the use of video in corporate reporting. It also discusses the Lab’s ongoing projects which focus on stakeholder reporting and the reporting of risks, uncertainties and scenarios.

The podcast ia available on the FRC website.

The podcast (30 minutes) is hosted by IFRS In­ter­pre­ta­tions Committee Chair and IASB Vice-Chair Sue Lloyd and Technical Staff member Patrina Buchanan and focuses on reverse factoring arrangements, cloud computing arrangements, classification of debt as current or non-current, defined benefit plans, and inflation cash flow hedge accounting.

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

In addition to proposals and comments on an advisory council, the proposed structure, due process matters, and the funding needed, the comment letter also discusses the cooperation with other standard setters and initiatives. Accountancy Europe notes, that it supports a “building block” approach to non-financial information (NFI) reporting standard setting: The base would be global standards for market transparency, achieved by the coordination, cooperation and consolidation of global NFI initiatives and additional “blocks” of EU NFI reporting standards could then be added to that, where necessary.

Under this scenario, Accountancy Europe notes, EFRAG’s role would be to endorse global NFI reporting standards in the EU and to develop the added “block” of EU NFI reporting standards important for the EU public policy objectives. The comment letter points out that international cooperation is the best way forward:

Therefore, we suggest EFRAG to collaborate with the IFRS Foundation, CDP, the Value Reporting Foundation, the Climate Disclosure Standards Board (CDSB) and the Global Reporting Initiative (GRI), to set the respective roles and task to avoid inefficiencies (e.g., output and funding) and to timely address the urgent issues at hand.

Please click to access the full comment letter on the Accountancy Europe website.

The Secretary of State for Business, Energy and Industrial Strategy (BEIS), who has been given the power of endorsing and adopting international accounting standards while the UK Endorsement Board (UKEB) is still being established, has now adopted amendments to IFRS Standards for:

• IBOR Phase 2 - Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) which focus on the effects on financial statements when an entity replaces the old interest rate benchmark with an alternative benchmark rate as a consequence of the global regulatory reform of key interbank offered rates (IBORs); and
• amendments to IFRS 4 - Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) which extend the expiry date of the temporary exemption from applying IFRS 9 Financial Instruments from 1 January 2021 to 1 January 2023, to align the effective dates of IFRS 9 with IFRS 17 Insurance Contracts for entities within the scope of the exemption.

The endorsement criteria assessment and adoption statement for IBOR Phase 2 and the endorsement criteria assessment and adoption statement for amendments to IFRS 4 are available on the UK Endorsement Board (UKEB) website. 

The UKEB has also updated its adoption statement report which is available on its website here.

The website will provide access to all key developments in relation to the UKEB and its work, including:

• UK-adopted international accounting standards;
• UKEB adoption status report;
• Other correspondance including UKEB appointments and meetings agendas and minutes; and
• the UKEB work plan.

The website is available on the UKEB website here.

We reiterate that we support actions in favour of global initiatives because the issues to be addressed are global issues and need global solutions. Businesses have global supply and value chains, face global risks and have global investors. Most importantly, issues such as climate change and achieving the UN Sustainable Development Goals require international solutions.

With respect to the Consultation document:

• We are supportive of the proposals in relation to EFRAG’s new mission and due process as described in the document.
• We support retaining the current infrastructure and role for the financial reporting.
• We support the idea of an enlarged General Assembly that covers all EFRAG’s activities.
• We support the proposals for an EFRAG (Supervisory) Board, which would look after the governance and administration of the overall organisation, as well as the oversight of all the EFRAG bodies.
• We support the financial reporting and non-financial reporting Boards having the ultimate decision-making powers on financial reporting and non-financial reporting issues respectively.
• For non-financial reporting, to the extent that EFRAG is entrusted with standard-setting activities, the non-financial reporting Board is likely to require enhanced technical competences, as compared to the current EFRAG Board.
• Collecting the views of EU Member States /national public authorities on non-financial reporting will be important.
• With respect to the EU institutions and agencies, we suggest their participation in an observer capacity with speaking rights, at each level of the EFRAG organisation, where this would be relevant.
• With respect to the representation of the private sector and civil society, we are strongly in favour of a public-private partnership for EFRAG.
• We support close involvement and/or cooperation between EFRAG and the identified key international non-financial reporting standard-setting organisations.
• To enable the EFRAG structure to achieve its possible mission for non-financial reporting standard-setting successfully, it will need additional competent operational resources at the EFRAG staff level.
• Finally, considering the proposed governance structure and the need for long-term finance, as well as the fact that the objective would be to possibly develop non-financial reporting standards, our view is that the European Commission and the Member States should provide the majority of the funding.

Please click to download our full comment letter here.