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DPOC approves shortened comment period for proposed amendments to IFRS 9 and IFRS 7 related to power purchase agreements

21 Mar, 2024

In an additional meeting today, the Due Process Oversight Committee (DPOC) discussed a possible shortened comment period for the IASB exposure draft on power purchase agreements expected to be published in May 2024.

During the meeting, the IASB explained its reasons for suggesting a shortened comment period:

  • IASB added the project on power purchase agreements as an urgent project in July 2023, following requests from stakeholders for a timely solution of the issue. Following the development of a possible solution by the staff, the IASB then discussed the issue at all meetings from December 2023 to March 2024.
  • To achieve its objective of providing a timely solution as asked for by stakeholders, the IASB expects to publish an exposure draft in May 2024 and is currently aiming to finalise the amendments in 2024.
  • Throughout the project, the IASB did extensive outreach with stakeholders - "shared the sandbox" with them - so stakeholders know what is coming and will only need to comment on technical details.
  • The IASB has clearly communicated on the status of the project and the progress made throughout the project.
  • The proposed changes are narrow-scope amendments affecting particular requirements in IFRS 9 only.
  • Implementing the proposed amendments would not be burdensome for preparers.

The DPOC followed the reasoning of the IASB and only asked a few clarifying questions. It finally agreed to a shortened comment period of 90 days.

Please click for the following additional information on the IFRS Foundation website:  

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DBT publishes summary of responses to its non-financial reporting review call for evidence

21 Mar, 2024

The Department for Business and Trade (DBT) has published a summary of responses to its non-financial reporting review call for evidence, and also an impact assessment which sets out the first stage of planned measures to reform the UK non-financial reporting framework.

In May 2023, the DBT working with the Financial Reporting Council (FRC), initiated a review of the non-financial reporting requirements UK companies need to comply with to produce their annual report and to meet broader requirements that sit outside of the Companies Act 2006.  The review looked at what opportunities exist to refresh and rationalise current reporting requirements so that the UK’s non-financial reporting framework is fit for purpose and delivers decision-useful information to the market.

Following the summary of responses to the call for evidence, the impact assessment outlines key planned changes including:  

  • Uplift in size thresholds - the Companies Act 2006 company size thresholds are to be increased by 50% in order to reflect historical and future inflation and to reduce regulatory burdens on business.
  • Removing requirements from the Directors’ Report: a number of current requirements within the Directors’ Report will be removed either because they are duplicative or no longer considered to provide useful information. This includes information on financial instruments, important events, likely future developments, research and development, branches, employment of disabled persons, engagement with employees, and engagement with suppliers, customers and others.
  • Removing requirements from the Directors’ Remuneration Report and Directors’ Remuneration Policy: content which was introduced into UK law as a result of implementing the EU Shareholder Rights Directive will be removed. For example, the requirement to compare the annual percentage change in each director’s remuneration to the average percentage change of employee remuneration as a whole, over a five-year comparison period.

Outside of the reporting framework, changes will also be made to enable annual reports to be shared digitally with members in the first instance and in relation to various audit-related matters including to make technical corrections to the audit regulatory framework on audit committees.

The government intends to make the changes via secondary legislation with a commencement date for the proposals of 1 October 2024.  The statutory instrument to implement these changes is due to be laid before Parliament in Summer 2024. This is considered the first step in the government’s wider reform programme, with further proposals relating to the UK’s non-financial reporting framework expected to be published for public comment in 2024.

A press release is available on the government website.  The impact assessment and summary of responses to the call for evidence are available on the DBT website. 

Update 22 March 2024 - the FRC has issued a press release on its website welcoming these plans.  An FRC podcast discussing what this means for conmpanies is also available on the FRC website.  

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IFRS Foundation announces new ITCG members

21 Mar, 2024

The IFRS Foundation has announced the appointments and reappointments of several members to the IFRS Taxonomy Consultative Group (ITCG). All appointments and reappointments take effect from 1 April 2024.

Two new organisations will now participate as will one new representative of an organisation that has already been participating. Four members of participating organisations have been reappointed.

For more information, please see the press release on the IFRS Foundation website.

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March 2024 ISSB meeting notes posted

21 Mar, 2024

The ISSB met in Frankfurt on 13 March 2024. We have posted our comprehensive Deloitte observer notes for the project discussed during the meeting.

The following topic was discussed:

ISSB consultation on agenda priorities: The ISSB discussed the strategic direction of its activities. The ISSB decided to begin new research and standard-setting projects; support the implementation of IFRS S1 and IFRS S2; enhance the SASB standards; pursue connectivity between the requirements in sustainability and financial reporting standards; seek to ensure that the ISSB standards are interoperable with other sustainability standards; and engage with stakeholders. The ISSB also decided to place a high level of focus on supporting the implementation of IFRS S1 and IFRS S2; to place a slightly lower level of focus on enhancing the SASB standards and on beginning new research and standard-setting projects and to give these activities equal attention; to reserve resources to give the ISSB flexibility; and not to specify a level of focus on connectivity, interoperability and engaging with stakeholders, acknowledging that these activities are integral to all of the ISSB’s work.

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

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Agenda for the March 2024 DPOC meeting

20 Mar, 2024

The Due Process Oversight Committee (DPOC) will meet on 21 March 2024 via video conference.

The agenda for the DPOC meeting is sum­marised below.

Thursday, 21 March 2024

  • In­tro­duc­tion
  • Power Purchase Agreements: Approval for a shortened comment period for proposed amendments to IFRS 9 and IFRS 7 related to power purchase agreements
  • Correspondence to the DPOC on submissions to the Interpretations Committee on climate-related commitments

Agenda papers for the meeting are available on the IFRS Foun­da­tion's website.

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Basel Committee urged to back ISSB standards

19 Mar, 2024

UK Finance, representing over 300 firms from the banking and finance industry, has used its response to Basel Committee’s climate risk Pillar 3 proposals to urge the Committee to back the ISSB standards to drive global consistency and comparability across all sectors in all jurisdictions to support the transition to a decarbonised economy.

While Pillar 3 disclosures are meant to provide information about banking institutions’ risk management practices and regulatory capital ratios, UK Finance believes that the the Basel Committee on Banking Supervision (BCBS) can use its weight to back the ISSB’s IFRS standards and promote their adoption globally. The comment letter notes:

We recommend that BCBS encourage IFRS S2 adoption by banks in those regions that do not implement them. We recommend that the BCBS do all that is necessary to ensure that the global baseline framework of IFRS S2 requirements become and continue to inform jurisdictional climate risk disclosure requirements, driving consistency, comparability and thereby support broader sustainability disclosure objectives.

Please click to access the full comment letter on the UK Finance website. The recommendations around IFRS S2 Climate-related Disclosures inform the five key recommendations in the cover note.

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ISSB publishes March 2024 podcast

19 Mar, 2024

The ISSB has released a podcast hosted by ISSB Chair Emmanuel Faber and Vice-Chair Sue Lloyd discussing the latest developments from the ISSB.

The podcast discusses the following:

  • the ISSB’s work with jurisdictions around the world;
  • the recent SEC ruling;
  • key takeaways from the SSAF meeting, the ISSB meeting and the TIG meeting;
  • the ISSB's strategic direction and balance of activities for the next two-year work plan;
  • the IFRS Sustainability Disclosure Taxonomy; and
  • further ISSB activities in March.

    For more information and access to the podcast, please see the press release on the IFRS Foundation website.

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    Parker Review publishes its 2024 update report

    18 Mar, 2024

    The Parker Review has published its 2024 update report ("the Review").

    The Parker Review was first commissioned in 2015 and set its first targets in 2016, for FTSE 100 companies to have at least one ethnic minority director on the board by December 2021 and for FTSE 250 companies to meet the same target by December 2024.

    Last year, the Review announced that it was extending its scope to senior management, asking the FTSE 350 to set targets for 2027, and to the top 50 private companies and partnerships, with information published for the first time in this year’s report.

    Key findings in the 2024 Review include:

    • In the FTSE 100 this year, 96 companies met the 2021 target of at least one ethnic minority director on the board, with ethnic minority directors holding 19% of all board positions. (2022: 96 companies, 18%)
    • In respect of senior roles on the board, ethnic minority directors held 12 CEO positions and 7 Chair positions.  
    • In the FTSE 250 this year, 70% of companies met the 2024 target of at least one ethnic minority director on the board, with ethnic minority directors holding 13.5% of all board positions. (2022: 60% of companies, 11%)
    • This was the first year in which the Review looked at the proportion of ethnic minorities in senior management positions, which stood at 13% for the FTSE 100 and 12% for the FTSE 250. Where companies reported to the Review that they had set 2027 targets for the proportion of ethnic minorities in senior management positions, these averaged out at 17% for the FTSE 100 and 15.5% for the FTSE 250. 44 companies out of the FTSE 100 and 50 companies out of the FTSE 250 shared these targets.
    • In respect of the top 50 private companies and partnerships invited to participate in the Review, 61% of those that shared their data had already met the target of having at least one ethnic minority director on the board (the target the private companies have been asked to meet by December 2027). 36 out of the 50 companies that were approached submitted data to the Review.

    The report also includes case studies, frequently asked questions, derived from company queries, an article on terminology which explores the benefits of referencing distinct ethnic minorities separately, an article on the evolution of executive search and an article from the Change the Race Ratio initiative.

    The full Review is available on the Parker Review website.

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    FTSE Women Leaders review publishes 2024 update report

    18 Mar, 2024

    The FTSE Women Leaders has published its 2024 update report ("the Review").

    The Review is the successor of the Hampton-Alexander Review and the Davies Review, all aimed at increasing focus on gender diversity at board and senior leadership level by Government, companies, and investors.

    The Review focuses on the FTSE 350 but over the past two years it has also looked beyond the largest listed companies to examine diversity in leadership at 50 of the largest private companies and partnerships in the UK.

    The 2024 Review, indicates that women now hold over one third of all leadership roles in FTSE 350 companies and includes the following key findings:

    • FTSE 350 companies met the target of women holding on average 40% of board positions last year, three years earlier than the target of December 2025. Women now hold 42.1% of board roles, with some companies targeting gender parity. There are no all-male boards remaining in the FTSE 350.
    • This means the UK is second globally in terms of percentage of women on boards, behind only France at 44.7% which operates a quota system rather than the voluntary system in the UK.
    • In respect of the four senior board roles, being Chair, Senior Independent Director (SID), CEO and CFO, there has been continued progress in representation in the role of the SID where women now hold 47% of positions in the FTSE 350. Women hold one in six Chair roles.
    • However, the number of women in executive director roles is lagging this, with only 15% across the FTSE 350. Churn in CEO positions has led to no change in the number of women in this role over the past year, at 21.
    • There has been progress in the number of women in the executive committee and their direct reports, which now stands at 34.5% for the FTSE 350, and at 28.2% on the executive committee itself (2022: 33.5% and 27%)
    • In respect of the top 50 private companies and partnerships, board representation for women stayed at 31%, the same as in the 2023 report. However there has been an increase in the number of women in the executive committee and their director reports, to 36%, up from 34% in the previous year. 46 out of the 50 companies that were approached submitted data to the Review.

    The Review notes that although the rate of appointing women to senior roles in the largest listed companies is rising, in 2022 more than six out of ten available leadership roles still went to men.

    The full Review is available on the FTSE Women Leaders website

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    Pre-meeting summaries for the March 2024 IASB meeting

    15 Mar, 2024

    The IASB will meet in London on 18-21 March 2024. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. We summarised the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

    The following topics are on the agenda:

    Board work plan update: The staff will provide an overview of the work plan. In particular, the staff will present completed projects, new projects, expected consultation documents and expected project completions.

    Post-implementation review (PIR) of IFRS 9—Impairment: The IASB will deliberate the feedback received in response to its request for information Post-implementation Review—IFRS 9 Financial Instruments—Impairment. The staff recommends that the IASB does not take any further action on the matters raised by respondents regarding the use of forward-looking scenarios and post-model adjustments or management overlays in measuring expected credit losses.

    Power purchase agreements: The staff will provide recommendations for amendments to propose in an exposure draft and ask for permission to begin the balloting process. In particular, the staff recommends proposed amendments to the own-use requirements and to the hedge accounting requirements. The staff also recommends that the IASB propose a scope for the amendments, and disclosure and transition requirements.

    Second comprehensive review of the IFRS for SMEs Standard: The IASB will continue the redeliberations of its proposals in the exposure draft (ED) Third edition of the IFRS for SMEs Accounting Standard. In particular, the IASB will discuss the proposed revised Section 23 Revenue from Contracts with Customers, additional and alternative simplifications, other issues raised by respondents to the ED, proposed revised Section 2 Concepts and Pervasive Principles and updating the paragraph numbers of the IFRS for SMEs standard.

    Climate-related and other uncertainties in the financial statements: The staff will explain the approach it has taken to develop examples illustrating how to apply requirements in IFRS Accounting Standards to report the effects of climate-related and other uncertainties in financial statements.

    Maintenance and consistent application: The IASB will discuss whether and to what extent the proposed disclosures requirements in the forthcoming exposure draft (ED) Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity should apply to subsidiaries without public accountability. The staff will also ask for permission to ballot the ED.

    PIR of IFRS 15 Revenue from Contracts with Customers: In this session, the IASB will further analyse the feedback specific to determining the transaction price, determining when to recognise revenue and disclosure requirements of IFRS 15. The staff recommends that the IASB take no further action on those items.

    Equity method: The staff will ask the IASB to clarify its tentative decision regarding transitional requirements for the proposed amendments to IAS 28 and to agree on the due process steps for the exposure draft.

    Management commentary: The IASB will be asked for comments and questions on the discussion about the direction of the management commentary project. The staff has identified the following four broad alternative directions that the IASB could take at a future meeting: finalise the project; retire the project; undertake a broader project; and keep the project on hold.

    Catch-up exposure draft of the forthcoming IFRS 19 Subsidiaries without Public Accountability: Disclosures: The staff will ask the IASB to agree on disclosure requirements to propose in the “catch-up exposure draft” following the publication of IFRS 19.

    Rate-regulated activities: The IASB will continue to redeliberate the proposals in the exposure draft Regulatory Assets and Regulatory Liabilities, in particular the discount rate and reduced disclosure requirements.

    Our pre-meet­ing summaries is available on our March meeting notes page and will be sup­ple­mented with our popular meeting notes after the meeting.

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