The Board will discuss the following:

• Financial instruments with characteristics of equity
• Maintenance and consistent application
• Primary financial statements
• Post implementation review of IFRS 9
• Contractual cash flow characteristics
• Business combinations under common control
• Equity method
• Second com­pre­hen­sive review of the IFRS for SMEs
• Dis­clo­sure ini­tia­tive — Sub­sidiaries without public ac­count­abil­ity: Dis­clo­sures

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 full agenda for the meeting is summarised below:

Agenda papers for this meeting are available on the IASB website.

Mr Barker is currently deputy dean and professor of accounting at Saïd Business School, University of Oxford where he leads Oxford Saïd’s sustainable business initiatives. He chairs the expert panel of Accounting for Sustainability (A4S) and has previously served as a member of several committees and bodies focused on corporate reporting in the UK and Europe.

Ms Chegar has 20 years of experience in sustainable investment and stewardship, portfolio management and investment research with both asset owner and asset manager perspectives. She is also currently serving as Co-Vice Chair of the SASB Standards Board, where she has been overseeing the development and maintenance of SASB’s industry-based standards since 2017.

Mr Leng is currently a Director in the Accounting Regulatory Department of the Chinese Ministry of Finance, where he oversees sustainability reporting initiatives, and also serves as a member of the IASB IFRS Taxonomy Consultative Group.

Ms Nnoli-Edozien has worked across multinational and indigenous companies, public institutions and civil society organisations, in Africa and Europe, to initiate sustainable development initiatives. In her last role, she served as the inaugural Group Chief Sustainability and Governance Officer of Dangote Industries Limited — one of Africa’s largest manufacturing businesses.

The press release on the IFRS Foundation's website also notes that appointments to bring the ISSB to quorum (eight members) will be announced shortly, with the aim of completing the inaugural appointments to the Board during the third quarter of 2022.

The White Paper set out the Government's proposals to respond to over 150 recommendations arising from independent reviews carried out by Sir John Kingman ('Independent Review of the Financial Reporting Council'), the Competition and Markets Authority (CMA) ('Statutory audit market services study') and Sir Donald Brydon ('The quality and effectiveness of audit: Independent review') (all links to BEIS website).  The proposed reforms in the paper set out how the Government planned to address the findings of each review and included a number of new measures in relation to directors, auditors and audit firms, the audit regulator and shareholders.

The government's response summarises the feedback that BEIS received from stakeholders on the White Paper and sets out the measures it intends to progress with.  

The response covers proposals which impact a number of different market participants most notably, company directors, auditors and professional bodies. It does not set out a precise timetable, but rather outlines the actions to be taken, including what the Government intends to ask of the regulator and other stakeholders. The reforms will be delivered by a variety of mechanisms over a period of several years with a focus on targeted and proportional benefits, noting that the overall cost of implementation has been reduced from the previous White Paper. The Government has also signalled its intention to explore potential deregulatory measures. The mechanisms to be used include:

• Market developments, for example in the demand for assurance services beyond audit, from PIEs and other significant companies;
• Work by professional bodies, for example to enhance members’ training and development;
• Changes by the regulator: to the UK Corporate Governance Code that currently applies to premium listed companies, and ongoing improvements to audit standards;
• A Ministerial Direction that lays the foundation for the introduction of Public Interest Entity (PIE) auditor registration by the Financial Reporting Council (FRC) in the near future;
• Secondary legislation (statutory instruments), which could be used to establish new reporting requirements for PIEs (for example, a Resilience Statement and reporting on distributable profits); and
• Primary legislation (a Bill in Parliament), which the Government is preparing initially to publish in draft, for subsequent introduction when Parliamentary time allows, to establish a new regulator and set its powers, objectives and duties.

One key element of the reform package is the proposed extension of the definition of the Public Interest Entity. This proposal will be taken forward through primary legislation but the scope of the definition has been amended from the White Paper proposals so that companies with 750 or more employees and at least £750m annual turnover will be classified PIEs.  The Government has decided to implement a tiered approach for the proposals with some proposals applicable to all PIES and others dependent upon size.

The response makes clear that the timescale for implementation of some measures is expected to stretch over several years, noting that the granting of powers to the Audit Reporting and Governance Authority (ARGA) will require primary legislation, and that changes to secondary legislation or the UK Corporate Governance Code will necessitate further consultation. The detail will depend not only on Parliament but also on Ministers’ assessment of the economic circumstances at the time. The Government has committed to give careful consideration to the appropriate minimum lead times to apply, so that market participants can be assured that the pace of change will be measured and manageable.

As a key strand of these reforms, the Government’s intention is to create ARGA and equip it with its powers at the earliest possible juncture, since many of these factors represent work that ARGA will need to do. The timescale for this and other legislative measures will depend on the availability of Parliamentary time and on Parliament’s agreement to the Government’s proposals.

The FRC has indicated that, ahead of Government legislation, it will shortly be outlining an extensive work plan to advance reforms which can be developed through existing powers or on a voluntary basis.

The most significant proposals covered in the government's response are:

• Proposals in relation to the responsibilities of, and reporting by directors
  • Capital maintenance
  • Definition of public interest entity
  • Directors’ obligations in relation to fraud
  • Exploring options for attestations on internal controls
  • New regulatory regime for directors
  • Options for assurance on areas such as climate, Alternative Performance Measures (APMs) and Key Performance Indicators (KPIs)
  • Payment practices
  • Publication of principal risks & audit plan for engagement with shareholders
  • Supervision of corporate reporting
  • The Resilience Statement

• Proposals impacting the work of audit committees
  
  • Regulatory framework for audit committees
  • The Audit & Assurance Policy 

• Proposals on the future of audit 
  • A new professional body for corporate auditors
  • Enhanced reporting by auditors
  • Managed shared audits
  • Operational separation
  • Principles of Corporate Auditing
  • Publication of AQR reports
• Proposals for the future of the Financial Reporting Council (FRC)

Please click on the links above to be taken to our resource pages summarising the key features of the proposals.  

A press release and the full government response and other supporting material is available on the BEIS website.

High­lights of the podcast include dis­cus­sions on:

• Technical staff’s research on Goodwill and Impairment.
• Analysis of the feedback received on Targeted Standards-level Review of Disclosures.
• Deliberation on the Primary Financial Statements, Dynamic Risk Management model, and Rate-regulated Activities projects.
• Decisions made on the Post-implementation Review of IFRS 9 — Classification and Measurement project.
• Tentative proposed amendments to the IFRS for SMEs Accounting Standard.
• Scope of the Disclosure Initiative — Subsidiaries without Public Accountability: Disclosures project.

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

Please click to view the detailed notes taken by Deloitte observers for the IASB meeting.

The Committee will discuss the following:

• IAS 21 and IAS 29 — Consolidation of a Non-hyperinflationary Subsidiary by a Hyperinflationary Parent
• IFRS 9 — Cash Received via Electronic Transfer as Settlement for a Financial Asset
• IAS 37 — Negative Low Emission Vehicle Credits
• IAS 32 — Special Purpose Acquisition Companies (SPAC): Classification of Public Shares as Financial Liabilities or Equity
• IFRS 17 — Transfer of Insurance Coverage under a Group of Annuity Contracts
• IFRS 17 and IAS 21 — Multi-currency Groups of Insurance Contracts
• Work in progress

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.

Please click for more information and registration in the press release on the EFRAG website.

The following topics were discussed:

IASB work plan

Since January, the IASB has removed from its work plan ‘Availability of a Refund (amendments to IFRIC 14)’, ‘Post-implementation Review (PIR) of IFRS 10, IFRS 11 and IFRS 12’ and ‘Pension Benefits that Depend on Asset Returns’. New projects the IASB will consider are a high priority project to assess a financial asset’s contractual cash flow characteristics, a narrow-scope project on the interaction of IFRS 10 and IFRS 16 related to the sale of a subsidiary with a leaseback, a project to revise the Due Process Handbook’s objectives for PIRs and research projects on intangible assets and the statement of cash flows and related matters. The IASB expects to finalise in 2022 amendments related to ‘Lease Liability in a Sale and Leaseback’ and ‘Non-current Liabilities with Covenants’. The next consultation document will be an ED from the comprehensive review of the IFRS for SMEs Accounting Standard.

Primary Financial Statements

The IASB decided to confirm the proposed requirements to disclose the income tax effect and the effect on NCI for each item disclosed in the reconciliation between an MPM and the most directly comparable subtotal or total specified by IFRS Accounting Standards, but did not decide on the proposed requirement to disclose how the entity determined the income tax required by the ED. The IASB decided to develop an approach of establishing a broad definition for income and expenses to be included in a single note about limited recurrence and requiring the note that provides information about income and expenses that meet the definition to be divided, so income and expenses with different recurrence characteristics can be identified easily. It also decided to continue to include in the definition income and expenses that are dissimilar to those expected to arise in the future because they are lower in amount and for such items of income and expenses, reconfirm the proposal to require disclosure of the amount recognised in the period and an explanation of why that amount has limited recurrence.

Dynamic Risk Management

In February, the IASB discussed an approach in which the designated derivatives would continue to be recognised at fair value in the statement of financial position with the DRM adjustment recognised in the statement of financial position, as the lower of (in absolute amounts): (i) the cumulative gain or loss on the designated derivatives from the inception of the DRM model and (ii) the cumulative change in the fair value of the risk mitigation intention attributable to repricing also risk from inception of the DRM model. This would be calculated using the benchmark derivatives as a proxy. The difference between the changes in fair value of designated derivatives and DRM adjustment will be recognised in the statement of profit or loss. The IASB decided to change the mechanics of the DRM model to this approach and move this project to the standard-setting programme.

Maintenance and consistent application

At its April 2022 meeting, the IFRS Interpretations Committee decided to finalise an agenda decision in response to a submission about whether, in applying IFRS 15, a reseller of software licences is a principal or agent. No IASB members objected to the finalisation of the agenda decision.

Post-implementation Review of IFRS 9

Most respondents to the PIR Request for Information (RFI) agreed that generally the IFRS 9 classification and measurement requirements work as intended, indicating that there is not a need for fundamental changes to the requirements. However, feedback indicated that the IASB could help entities with consistent application by clarifying particular aspects of the SPPI requirements. This was indicated in particular by the many questions raised by respondents about how to apply the SPPI requirements to financial assets with ESG-linked features, and about the scope of the requirements for contractually-linked instruments (CLIs). The IASB decided to start a standard-setting project to clarify particular aspects of the requirements for assessing a financial asset’s contractual cash flow characteristics (paragraphs B4.1.7−B4.1.26 of IFRS 9).

Second Comprehensive Review of the IFRS for SMEs Accounting Standard

At its May 2021 meeting, the IASB started deliberating specific sections of the IFRS for SMEs Accounting Standard that could be aligned with new requirements in IFRS Accounting Standards in the scope of the review. At this meeting, the IASB deliberated: feedback on the scope (including the definition of public accountability) and name of the IFRS for SMEs Accounting Standard; topics identified when developing the ED after considering the tentative decisions made by the IASB in deliberating this comprehensive review that are either potential inconsistencies or sweep issues; transition requirements for an entity applying the amendments to the IFRS for SMEs Accounting Standard for the first time; and the effective date of the amendments to be proposed. The IASB voted in favour of all of the staff recommendations, which are set out in the more detailed summaries.

Goodwill and Impairment

As part of the IASB’s work, the staff have performed further analysis on specific aspects of respondents feedback on the subsequent accounting for goodwill. The purpose of this meeting was to provide the IASB with a summary of the staff research. The agenda paper also provided information about the project plan and how this research is relevant to that plan. The IASB was not be asked to make any decisions during this session. The IASB discussed the feasibility of estimating the useful life of goodwill and the pattern in which it diminishes; the auditability of the useful life of goodwill; the usefulness of information associated with managements’ estimates of the useful life of goodwill; and potential consequences of transitioning to an amortisation-based model.

Rate-regulated Activities

The IASB continued redeliberating the proposals in Exposure Draft ED/2021/1 Regulatory Assets and Regulatory Liabilities. The IASB decided that the final standard clarify that for a regulatory asset or a regulatory liability to arise, it is necessary that differences in timing originate from, and reverse through, amounts included in the regulated rates that an entity accounts for as revenue applying IFRS 15. The IASB also decided that the final standard would not exclude from its scope regulatory assets or regulatory liabilities related to financial instruments within the scope of IFRS 9.

Disclosure Initiative—Targeted Standards-level Review of Disclosures

The purpose of this meeting was for the IASB to discuss the feedback from comment letters on ED/2021/3 Disclosure Requirements in IFRS Standards—A Pilot Approach. The cover paper included the background to the project as well as the following summary of the key messages in the comment letters. Almost all respondents agreed that the IASB should engage early with users of financial statements and other stakeholders when developing disclosure requirements in IFRS Accounting Standards, integrate development of disclosure requirements with the rest of the accounting model and consider implications for digital reporting. The IASB was not asked to make any decisions in this session.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The IASB decided to proceed to finalise the draft standard with the scope as proposed in the ED, but did not commit to review the scope of the draft standard as part of the PIR of the standard. The IASB decided to clarify the proposals to assist in understanding the definition of public accountability and that an intermediate parent assesses its eligibility to use the draft standard in its separate financial statements on the basis of its own status without considering whether other group entities have, or the group as a whole has, public accountability.

An analysis of how the IASB’s work plan has changed as a result of the meeting is available here.

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

The statement notes the significant efforts by the International Sustainability Standards Board (ISSB), the US Securities and Exchange Commission (SEC), and the European Commission together with the European Financial Reporting Advisory Group (EFRAG) aimed to address the need to enhance and evolve corporate reporting to include and consider sustainability information. However, it also states that a coordinated approach is needed to provide the comprehensive global baseline of sustainability disclosures needed by capital markets. Interoperability between different requirements would help meet the needs of investors who allocate capital internationally, companies who operate and raise capital across national borders, and the accounting profession that serves all consumers of corporate reporting. The statement notes:

Together, we welcome the establishment by the International Sustainability Standards Board of a working group to enhance compatibility between the global baseline and jurisdictional initiatives through a coordination mechanism. We strongly urge all involved policymakers to engage with this platform at this current historical juncture and strive towards delivering the level of alignment needed by financial markets at the global level.

Please click to access the full statement on the IFAC website.

Following the first paper The Case for Realigning Reporting Standards with Modern Value Creation published in September 2021, a second paper Human Capital Introspective can now be accessed through the press release on the IVSC website.