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FRC proposes amendments to FRS 102

29 May 2020

The Financial Report Council (FRC) has issued Financial Reporting Exposure Draft (FRED) 74 ‘Interest rate benchmark reform (phase 2)’.

Interest rate benchmarks such as the London Interbank Offered Rate (LIBOR) are being reformed, and it is anticipated that LIBOR will not be available after 2021. There is increasing uncertainty about the long-term viability of some interest rate benchmarks and this gives rise to issues affecting financial reporting in the period before the reform, particularly in relation to hedge accounting.

In response to the uncertainty, the FRC amended specific hedge accounting requirements in Section 12 of FRS 102 in December 2019, provide relief that will avoid unnecessary discontinuation of hedge accounting as interest rate benchmarks are reformed.

The amendments in 2019 focussed on financial reporting issues arising before the reform of an interest rate benchmark. Further issues might affect financial reporting during the reform of an interest rate benchmark in respect of modifications to financial instruments, changes to hedging relationships and modifications to leases. FRED 74, which represents a second phase of amendments, focusses on these issues.

FRED 74 proposes amendments to the accounting requirements in Section 11 Basic Financial Instruments, Section 12 Other Financial Instruments Issues and Section 20 Leases to provide relief to minimise discontinuities in the accounting for financial instruments and leases, minimise reporting costs, assist entities in providing useful information to users of financial statements and avoid unnecessary discontinuation of hedge accounting as agreements are modified in order to transition to alternative benchmark rates. Entities will account for modifications as if they result from periodic re-estimations of cash flows to reflect changes in market rates of interest.

It is proposed that the amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted. Comments are requested by 30 September 2020.

A press release and the draft amendments are available on the FRC website.

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FRC amends FRS 101

29 May 2020

The Financial Report Council (FRC) has made amendments to FRS 101 ‘Reduced Disclosure Framework’ as a result of its annual review of the standard.

Amendments have been made to the standard to improve the consistency of the disclosure exemptions in relation to the statement of cash flows and related disclosures.

The amendments to FRS 101 provide an exemption from the disclosure of cash flows required by paragraph 24(b) of IFRS 6 Exploration for and Evaluation of Mineral Resources. A similar amendment has been made to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland for qualifying entities.

An amendment has also been made to the exemption from paragraph 33(c) of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, removing the condition that this exemption is only available when equivalent disclosures are made in the relevant consolidated financial statements of the group in which the entity is consolidated. This is for consistency with the exemption from the presentation of a statement of cash flows.

A press release and the amendments are available on the FRC website.

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FCA extends reporting deadline for interims

28 May 2020

The Financial Conduct Authority (FCA) has confirmed additional relief for listed companies facing the challenges of corporate reporting during COVID-19.

The temporary relief, which follows the announcement in March for annual reports, will permit listed companies an additional month in which to publish their half yearly financial reports. Currently, under the Transparency Directive, listed companies are required to publish half yearly financial reports no later than 3 months from the end of the period to which the report relates.

The FCA has indicated that the temporary extension will be kept under review and, at a suitable time, will announce how the policy will be removed in a fair, orderly and transparent way.

The full bulletin is available on the FCA website.

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IASB finalises amendment to IFRS 16 regarding COVID-19-related rent concessions

28 May 2020

The International Accounting Standards Board (IASB) has published 'Covid-19-Related Rent Concessions (Amendment to IFRS 16)' amending the standard to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. Concurrently, the IASB also published a proposed Taxonomy Update to reflect this amendment.



The COVID-19 pandemic has led to some lessors providing relief to lessees by deferring or relieving them of amounts that would otherwise be payable.  In some cases, this is through negotiation between the parties, but can be as a consequence of a government encouraging or requiring that the relief be provided. Such relief is taking place in many jurisdictions in which entities that apply IFRSs operate.

When there is a change in lease payments, the accounting consequences will depend on whether that change meets the definition of a lease modification, which IFRS 16 Leases defines as “a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease (for example, adding or terminating the right to use one or more underlying assets, or extending or shortening the contractual lease term)”.

On 24 April 2020, the Board published an exposure draft with a proposed amendment intended to provide practical relief to lessees in accounting for rent concessions arising as a result of the COVID-19 pandemic. Given the urgency of the matter, the exposure draft was published with a 14-day comment period. On 15 May 2020, the Board considered the feedback received and decided to finalise the amendment with some changes.



The changes in Covid-19-Related Rent Concessions (Amendment to IFRS 16) amend IFRS 16 to

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

The main change from the proposal in the exposure draft is that the IASB had proposed that the practical expedient should only be available for lease payments originally due in 2020. However, after having considered the feedback to the exposure draft, the IASB decided to extend this period to June 2021 to also capture rent concessions granted now and lasting for 12 months.

The IASB considered but decided not to provide any additional relief for lessors as the current situation is not as equally challenging for them and the required accounting is not as complicated.


Effective date

The amendment is effective for annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted, including in financial statements not yet authorised for issue at 28 May 2020. The amendment is also available for interim reports.


Proposed Taxonomy Update

The IASB has also published a proposed Taxonomy Update to reflect the amendment to IFRS 16. Comments on the proposed Taxonomy update are requested by 29 June 2020.


Additional information

Please click for:


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EC review of the NFRD postponed by three months

27 May 2020

In February 2020, the European Commission (EC) launched an initiative to review the European Non-Financial Reporting Directive (NFRD). The COVID-19 pandemic has now led to changes in the timetable.

The review was originally scheduled to be completed in the fourth quarter of 2020. An updated work programme released today shows that this date has been moved to the first quarter of 2021.

Please see this communication on the EC website (entry number four under item 2).

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HM Treasury sets minimum financial reporting requirements for 2019-20

26 May 2020

As a direct consequence of the effects of COVID-19 on government entities, HM Treasury has taken the decision to reduce the financial reporting requirements for preparers of government annual reports and accounts for 2019-20.

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.  

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 paragraph 5.28 of the FReM. This is instead of providing the performance analysis as set out in paragraphs 5.2.6 and 5.2.9-5.2.10 of the 2019-2020 FReM.

Within the accountability report, the only optional requirements relate to the Statement of Parliamentary Supply (SoPS). Entities applying the FReM are no longer required to adhere to the comply or explain requirement in paragraph 3.1.7(b) of the 2019-20 FReM, that SoPS disclosures must follow the form of the illustrative disclosures. Entities are also permitted to omit the requirements set out in 3.1.8 (a) and (b) 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 2019-20 FReM.

The Addendum is available on the HM Treasury website.

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IASB releases podcast on IFRS 17 (May 2020)

26 May 2020

The IASB has released a podcast featuring IASB member Darrel Scott and technical staff member Vitalina Kobernik as they discuss the developments at the May 2020 Board meeting related to the amendments to IFRS 17 'Insurance Contracts'.

The amendments to IFRS 17 are being finalised by the staff. During this process the staff identified five (sweep) issues for which the Board decided to make additional changes to the standard, along with two other matters that were identified after the staff paper had been distributed.

The podcast can be accessed through the press release on the IASB website.

Our comprehensive meeting notes from the session are available here.

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Updated IPSAS-IFRS alignment dashboard

26 May 2020

The International Public Sector Accounting Standards Board (IPSASB), which develops the International Public Sector Accounting Standards (IPSAS) for financial reporting by governments and other public sector entities, has released an updated IPSAS-IFRS alignment dashboard showing how far individual IPSAS are aligned with corresponding IFRSs.

Please click to access the updated alignment dashboard prepared for the June 2020 IPSASB meeting on the IPSASB website.

In this context, please also so our 2020 edition of IPSAS in your pocket published in January.

Deloitte document (mid gray) Image

We comment on the IASB's proposed amendments as a result of the second phase of its project on the IBOR reform

25 May 2020

We have commented on IASB exposure draft ED/2020/1 'Interest Rate Benchmark Reform — Phase 2 (Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)', which was published by the IASB on 9 April 2020.

The ED contains proposed amendments that would address issues that might affect financial reporting after the reform of an interest rate benchmark, including its replacement with alternative benchmark rates.

We are largely supportive of the amendments. In particular, we support the key changes that ensure that entities that apply hedge accounting will continue to do so as they transition to new benchmark interest rates and that the accounting for the modification of hedged items, when those modifications arise directly from the reforms, are reflected on a prospective basis via the application of IFRS 9:B5.4.5. We consider these as being the two most important elements of the proposals.

Please click to download our full comment letter.

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Updated IASB work plan — Analysis (May 2020 meetings)

25 May 2020

Following the IASB's May 2020 supplementary and regular meetings, we have analysed the IASB work plan to see what changes have resulted from the meetings and other developments since the work plan was last revised in April 2020. Almost all changes result from the numerous exposure drafts and final amendments the IASB has published recently.

Below is an analysis of all changes made to the work plan since our last analysis on 24 April 2020.

Standard-setting projects

  • no changes

Maintenance projects

  • Annual improvements — 2018-2020 cycle — removed from the work plan as the IASB completed this cycle of annual improvements by issuing Annual Improvements to IFRS Standards 2018–2020 on 14 May 2020; projects that were part of this cycle included:
    • Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities (Amendments to IFRS 9)
    • Lease Incentives (Amendment to Illustrative Example 13 accompanying IFRS 16)
    • Subsidiary as a First-time Adopter (Amendment to IFRS 1)
    • Taxation in Fair Value Measurements (Amendment to IAS 41)
  • Classification of liabilities — Effective date — an exposure draft ED/2020/3 Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Proposed amendment to IAS 1) was published on 4 May 2020 with comments requested by 3 June 2020; the feedback on the exposure draft will be discussed in June 2020
  • IFRS 16 and COVID-19 — the IASB discussed the feedback on the exposure draft published on 24 April 2020 at its supplementary meeting on 15 May 2020 and expects to issue final amendments "on or around 28 May 2020"
  • IAS 37 — Onerous contracts — removed from the work plan as the IASB issued Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) on 14 May 2020
  • IAS 16 — Proceeds before intended use — removed from the work plan as the IASB issued Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) on 14 May 2020
  • IFRS 3 — Updating a reference to the Conceptual Framework — removed from the work plan as the IASB issued Reference to the Conceptual Framework (Amendments to IFRS 3) on 14 May 2020

Research projects

  • Dynamic risk management — core model outreach has been clarified to take place in fourth quarter of 2020 (previously second half of 2020)

Other projects

  • IFRS Taxonomy update — Amendments to IFRS 17 and IAS 16 — a project newly added to the work plan; a proposed taxonomy update is expected in July 2020
  • IFRS Taxonomy update — Covid-19-related rent concessions (Amendment to IFRS 16) — a project newly added to the work plan; a proposed taxonomy update is expected in May 2020

The above is a faithful comparison of the IASB work plan at 24 April 2020 and at 25 May 2020. For access to the current IASB work plan at any time, please click here.

Correction list for hyphenation

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