On IFRS 17, Mr Hoogervorst first stressed that IFRSs are the global accounting language with one big exception where the economy still uses a wide variety of mostly outdated standards and historical cost, so that insurers discount their pension liabilities at historical interest rates that in no way reflect the negative interest rates of today. He stressed that the International Monetary Fund calls for the new standard urgently as does the Financial Stability Board. Mr Hoogervorst also pointed out that the IASB listens very closely to outside comments and expertise - much of it from the EU and the European Financial Advisory Group (EFRAG). Of the ten proposed amendments to IFRS 17 the IASB is currently considering, six were brought forward by EFRAG and five of those have been dealt with.

The other big topic Mr Hoogervorst spoke about was the IASB's role in wider corporate reporting. He noted that not all non-financial information can be captured easily in financial statements as it is difficult to measure and recognise, and yet he also acknowledged that this information can be important to investors. As last year, Mr Hoogervorst pointed to the IASB's project to update the management commentary practice statement and noted that management commentary provided the space for information that does not naturally fit into the financial statements but can have a financial effect nonetheless. He stated that the IASB's role is not to set sustainability reporting standards as there are already many standard-setters ("too many") active in the field, but to provide a framework through the management commentary that would give preparers the opportunity to connect financial and non-financial information.

There were more Parliamentarians at this meeting than in the previous years and IFRS 17 and wider corporate reporting were exactly the topics they commented on. On IFRS 17, one Parliamentarian wanted to know that if this was so important why did not the US apply the standard. Mr Hoogervorst explained about the US decision in 2011 to stop convergence with IFRSs, but he also noted that IFRSs are accepted as accounting standards (for foreign private issuers) in the US, and IFRS adoption continues to be spreading around the world. On IFRS 17, he especially noted Korea, who will "courageously" adopt IFRS 17 and use it coupled with strict regulation as an opportunity to recapitalise its insurance market. He also stressed that he wished that the EU would speed up its IFRS 17 adoption process, because, he said, the standard can help deal with some of the present problems, especially in the context of negative interest rates.

The questions around wider corporate reporting were mostly linked to the European Commission's "Green Deal". There were questions regarding more quantitative not only qualitative information, more forward-looking information, and the expression of frustration that the IASB was not doing enough quickly enough. Mr Hoogervorst once more explained that the IASB's expertise was not in sustainability standard-setting, even though it was happy enough to provide a platform through the updated management commentary practice statement, which will include guidelines how sustainability information can be included in the management commentary and will provide space for such information, but it will not contain any standards for doing so. He acknowledged that not everything was "hunky-dory" in sustainability reporting, especially the huge fragmentation in that space was discouraging. Mr Hoogervorst allowed himself the hope that at some point the many players in the filed would merge into one global standard-setter. However, he warned of two aspects in the field one would need to be aware of. One would be that current sustainability standards face in two different directions: information on risks and opportunities for companies and thus investors (this would include all the non-financial information that can become financial information in the long run) and information on risks for society at large. And the other would be that sustainability information while it is much needed is much less precise than financial information and it is much more political.

A recording of the exchange of views is available on the European Parliament website.

The study assessed how 1000 European companies disclose sustainability and other non-financial information. Key findings of the study were:

1. Less than 22% of the companies surveyed report climate-related key performance indicators in summarised statements, the rest of them publish them scattered around in different locations or not at all;
2. only 20%-25% of companies describe risks specifically even though identifying them as relevant to the company in the first place;
3. the TCFD criteria are not applied;
4. outcomes are only reported in 4% of cases despite that fact that risks are identified and in some cases activities described;
5. supply chain transparency is low with supply chain transparency in the apparel sector being the highest but still not exceeding 14%;
6. only 6% of companies provide economic figures on sustainability activities;
7. disclosures are immaterial.

There is not a major difference between different European regions, with the exception that companies from former Eastern Europe lag behind.

Generally, disclosures are not specific enough to enable understanding of a company’s position and future developments. Reports focus on presenting general policies and commitments, but not concrete targets, outcomes of policies with respect to these targets, and specific information on risks and impacts.

The following additional information is available on the Alliance for Corporate Transparency website:

• Press release
• Final report
• Database with full analyses and findings

The embedding launch event offered two opening speeches by MEPs, a panel discussion and two fire-side chat sessions on the direction for the reform of the Non-Financial Reporting Directive and an explanation of the plans of the European Commission regarding the Non-Financial Reporting Directive. Panel members included representatives from WWF, the analysts side, the industry, GRI, CDP, and CDSB. The European Commission was represented by Alain Deckers, Head of the Unit on corporate reporting, audit and credit rating agencies. All parts of the launch event offered the audience opportunities to raise questions or comments. The main messages that emerged from the panels and the audience were:

• While quite a lot of companies provide information, very few provide useful information.
• Analysts don't want more information, they want relevant information.
• Materiality is of essence.
• There is a great tendency towards boiler plate information.
• The lack of useful information is not only due to a lack of clearness in the reporting requirements, but also due to how these are applied, how the reports are drawn up, and how much demand/pressure there is from the user side.
• Reporting on individual matters very often improves, once "something has happened".
• Information lacks connectivity.
• Information needs to be comparable, yet companies must be allowed to report on what is relevant for them.
• Information should be forward looking and identify not only risks but opportunities.
• Sustainability reporting can learn from financial reporting, where there already are a well-established architecture, an international standard-setter, and international standards.
• There should be more connection between financial information and non-financial information.
• Disclosure alone, even if mandatory, does not suffice to achieve a change in company behaviour.
• It is a mistake to try to use reporting legislation to manage a moral obligation.

In his concluding remarks, Mr Deckers noted that the results presented in the research form a great evidence base for the upcoming review of the EU Non-Financial Reporting Directive. He clearly distinguished between "review" and "revision", although he noted that politics and markets have moved on since the Directive was first released. Mr Deckers stated that sustainability must be "at the heart of" company reporting, but he also conceded that it is only part of the picture and cannot solve all the problems. He also pointed at the tension between principles-based and rule-based requirements that is well known from financial reporting and that would form part of the debate on sustainability reporting. As regards the way forward, Mr Deckers pointed at the recently launched initiative to review the Non-Financial Reporting Directive, the three-month corresponding consultation that would open very soon ("later this week"), and an expected proposal for legislation at the end of 2020. He also mentioned that preparatory work for standard-setting would begin in parallel, in order to be able to move quickly.

The main change is that Amendments to IFRS 17 Insurance Contracts will now be discussed on Tuesday 25 February (pulled forward from 26 February).

The full agenda for the meeting can be found here.

More in­for­ma­tion about the issues is set out below:

Click to access all our comment letters to the IASB, IFRS Foun­da­tion, and IFRS In­ter­pre­ta­tions Committee. 

The Board will discuss the following:

• IBOR reform and the effects on financial reporting
• Disclosure initiative — Targeted Standards-level review of disclosures
• Disclosure initiative — Accounting policies
• Amendments to IFRS 17 Insurance Contracts
• Consistent application matters
• Business combinations under common control

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 role of investment managers is to invest on behalf of savers around the world seeking to deliver long term returns which meet their investment needs. One way they do this is by ensuring that the companies in which they invest in are run to generate long term returns for shareholders and ultimately savers. The investment managers have high expectations of UK listed companies which cover more than just share price performance or dividend yield. Investors now expect companies to be run taking into account a wider range of factors including environmental, social and governance issues.

The publication sets out the expectations of the Investment Association in four areas that its members believe can be critical drivers of long-term value:

• Responding to climate change;
• Audit quality;
• Stakeholder engagement; and
• Diversity.

It outlines why investors consider these four issues to be important areas of focus for companies in 2020 and also sets out their expectations for change in 2020. For companies with year ends on or after 31 December 2029, IVIS, the IA’s Corporate Governance research service, will assess the progress made and highlight where they are not meeting investor expectations.

The full publication is available on the Investment Association website here.

The letters explain that during the transition period there will be no changes to the UK’s auditing, accounting and corporate reporting frameworks. The letters explain that now the UK has left the European Union with the Withdrawal Agreement, the guidance and correspondence that was previously issued about the effects of a ‘No Deal’ are no longer relevant.

In 2019 the government approved a number of statutory instruments for the audit and accounting sectors; these will come into force at the end of the transition period - 31 December 2020 - with most changes taking effect for periods beginning after that date.

The accounting letter explains how the accounting and corporate reporting regime in the UK will change following the end of the transition period. In particular, UK incorporated companies will be required to use “UK-adopted IAS” for financial years beginning after the end of the transition period, and certain preparation, filing and audit exemptions will also change.   The letter will be particularly relevant for UK and EEA listed companies, AIM companies, large privately-owned entities and Global Depository Receipt (GDR) issuers.

The audit letter sets out key changes to the future of audit regulation following the end of the transition period. It specifically relates to the registration and recognition of UK and EEA auditors and to ongoing UK audits but also covers group audits and firm ownership. The letter will be relevant to auditors and firms.

Both letters include a number of frequently asked questions to assist businesses with their preparations.

Please click to access the letters and supporting materials on the FRC website. Our previous news item on the new legislation is available here.

The event will discuss the future of corporate reporting in the EU.

Click here for information and details of how to register.

The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

• Agenda Consultation (1–11): The ASAF discussed potential financial reporting priorities for the Board to discuss in the request for information. As high-level recommendations ASAF members stated that the Board should communicate its resource capacity in the RFI, that the Board should prioritise post-implementation reviews and the completion of existing major projects, and should also prioritise the effects of technology and digital reporting on standard-setting.
• Post-implementation review of IFRS 10, IFRS 11, and IFRS 12 (12–18): The ASAF was given an update on the feedback received from outreach in Phase 1 of the post-implementation review and commented on potential issues to be considered in the RFI.
• Accounting for intangible assets (19–28): The KASB gave a presentation on its research project on exploring a way to complement financial statements with a separate statement that identifies core intangibles and presents their value.
• IFRS 17 Insurance Contracts (29–35): The ASAF received an overview of the feedback on the exposure draft Amendments to IFRS 17 and was updated on the preliminary decisions of the Board at the November and December 2019 meetings.
• Agenda planning (36–38) — The ASAF discussed the proposed agenda for its April 2020 meeting.

A full summary of the meeting is available on the IASB's website.

Participants at the meeting, which was chaired by IASB member Darrel Scott, discussed primary financial statements, the IBOR reform, the review of the IFRS for SMEs, the Due Process Handbook Review, IAS 16 and proceeds before the intended use, the 2020 Agenda consultation, China’s experience on implementing IFRS 9, and extractive activities.

The next meeting of the EEG will be held in South Africa on 11–13 May 2020.

Please click for access to the full report (eight pages) on the IASB website.