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UK Endorsement Board publishes its draft comment letter on the IASB’s ED Regulatory Assets and Regulatory Liabilities

16 Jul, 2021

The UK Endorsement Board (UKEB) has published its draft comment letter on the International Accounting Standard Board’s (IASB's) Exposure Draft ED/2021/1 'Regulatory Assets and Regulatory Liabilities'.

Overall the UKEB supports the proposals in the Exposure Draft.  However it does express a number of concerns with the proposals namely that:

  • The proposed standard should be clarified so that it is explicit that the agreements in the scope of the definition “regulatory agreement” reflects the small subset of regulatory agreements. 
  • The proposed standard should be clarified to explicitly exclude certain types of contracts and agreements, such as service concession arrangements.
  • The proposed standard should explicitly require an independent third-party as an entity’s regulator. 
  • The proposed requirement to exclude regulatory returns relating to assets not yet available for use in Total Allowable Compensation (TAC) does not reflect the substance of that return.

Comments on the draft comment letter are requested by 26 July 2021.  A press release, the draft comment letter and the invitation to comment are available on the UKEB website.

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UK Endorsement Board publishes its draft comment letter on the IASB’s Third Agenda Consultation Request for Informtion

16 Jul, 2021

The UK Endorsement Board (UKEB) has published its draft comment letter on the International Accounting Standard Board’s (IASB's) Third Agenda Consultation Request for Information.

The UK Endorsement Board's draft comment letter has been informed through desk-based research and outreach with its stakeholders.  The draft comment letter recommends that the IASB:

  1. Retains sufficient flexibility in its work plan to address the interaction between IFRS and any future international sustainability standards to be developed by the International Sustainability Standards Board (ISSB).
  2. Allocates more resource to its work on digital financial reporting.
  3. Includes in its work on Standards development a structured and cohesive research programme which anticipates and addresses emerging issues.
  4. Adds three large-scope high-priority projects to its work plan: climate-related risk, intangibles, and statement of cash flows and related matters.  The draft comment letter recommends suggested scope for these projects including a cross-standard approach to the climate-related risk and intangibles projects to support efficiency and consistency.
  5. Considers whether it should pause or rationalise certain projects on its current work plan.  The draft comment letter suggests that the projects on the Second Comprehensive Review of the IFRS for SMEs and Management Commentary could be paused and the Extractive Activities projects be rationalised in order to provide the required resources.

Comments on the draft comment letter are requested by 31 August 2021.  A press release, the draft comment letter and the invitation to comment are available on the UKEB website.

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UK Endorsement Board secretariat publishes its feedback statement on the IASB's request for information on the post-implementation review of IFRS 10, 11 and 12

16 Jul, 2021

The UK Endorsement Board secretariat has published its feedback statement on the International Accounting Standard Board’s (IASB's) request for information on the post-implementation review of IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements' and 'IFRS 12 Disclosure of Interests in Other Entities'.

The UK Endorsement Board secretariat had previously published its final comment letter in May 2021 .

The feedback statement summarises the main comments received by the UKEB secretariat on its draft comment letter and explains how the comments were reflected in the final comment letter submitted to the IASB.

A press release and the feedback statement are available on the UK Endorsement Board website.

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We comment on the proposed CSRD

16 Jul, 2021

The Deloitte firms in the European Union on behalf of Deloitte Global have provided feedback on the proposed EU Corporate Sustainability Reporting Directive (CSRD).

We support many of the proposals of the CSRD, including the development of EU Sustainability Reporting standards (ESRS) allowing for both international consistency and catering for EU needs and its legislative landscape. However, we note that issues at stake are global, investors and other stakeholders are often global, and many companies operate and source through global value chains. Therefore, similar to the G7 ministers of finance and central bank governors, we support a baseline global reporting standard for sustainability to be developed by the IFRS Foundation, which jurisdictions can further supplement.

Please click to download the full comment letter here.

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A4S publishes introduction to sustainability-related reporting

15 Jul, 2021

The Prince of Wales' Accounting for Sustainability Project (A4S) has published 'Navigating the Reporting Landscape'.

The guide offers a brief introduction to the changing corporate reporting landscape. It summarises recent key developments in sustainability reporting including EU developments and the sustainability initiative of the IFRS Foundation Trustees. It shows how sustainability reporting is impacting the role of the accountant and shaping the future of corporate reporting. It also highlights how this area is likely to evolve going forward, offering signposting to further sources of information.

Please click to access the guide on the A4S website.

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Value Accounting Network founded

15 Jul, 2021

A group of nine initiatives has founded the Value Accounting Network. They share the ambition that the value provided by and experienced by people and nature must be included in all decision-making.

The network defines value accounting as: "The collection, calibration, and use of information about the relative value that an organization creates, preserves, or erodes for its stakeholders, using common units. This information is used when making decisions for a variety of purposes."

The group has published agreed statements of commonality:

  1. We firmly believe it is vital for businesses, finance, and governments to base decisions on value accounting.
  2. We aim to modernize accounting to transform governance practices, decision making, and reporting.
  3. We believe that we need generally accepted principles to account for value.
  4. We believe that integrated thinking, and a holistic systems-based approach is essential.
  5. We embrace and support the concept of ‘capital’ reflecting stocks that can change over time and that underpin increasing or decreasing flows of benefits to people, communities, the environment, and the economy.
  6. We recognize the importance of accounting for holistic value creation, the value of impacts and dependencies on different capitals.
  7. We recognize that the value to society (inside-out) and value to the entity (outside-in) are both essential to assess and report value.
  8. We believe that the trade-offs between capitals and between stakeholders must be specified and addressed in decision making.
  9. We recognize the importance of existing efforts, and we are building on the standards, frameworks and definitions that have already been agreed.

The Value Balancing Alliance, one of the founding members of the Value Accounting Network, makes the following information available on its website:

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EFRAG issues draft endorsement advice on Amendments to IAS 12

15 Jul, 2021

The European Financial Reporting Advisory Group (EFRAG) has issued a draft endorsement letter and a separate invitation to comment relating to the use in the European Union (EU) of 'Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12' (the Amendments).

The Amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations.

EFRAG recommends the endorsement of the Amendments. EFRAG’s initial assessment is that the Amendments meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.

Comments are requested by 30 September 2021.

For more information, see the press release, the draft endorsement advice letter and the invitation to comment on the EFRAG website.  EFRAG has also updated its endorsement status report to reflect the draft endorsement advice.

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Summary report and video of European Lab @EFRAG webinar on sustainability

13 Jul, 2021

On 25 May 2021, the European Financial Reporting Advisory Group (EFRAG) project task force on reporting of non-financial risks and opportunities and linkage to the business model held a webinar where it introduced key findings in its draft report. EFRAG has now published a summary report and a video from the event.

The draft report has been developed after conducting fieldwork that involved an assessment of the following:

  • reporting practices on sustainability-related risks, opportunities, and linkage to the business model;
  • user needs and expectations, the extent to which these are addressed by current reporting practices and challenges faced by companies in providing such information; and
  • innovative reporting data and technology use cases.

For more information, see the press release, summary report, and video (YouTube) of the webinar on the EFRAG’s website.

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UK GAAP application for reporting periods ending 30 June 2021

12 Jul, 2021

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 30 June 2021.

The FRC has made several changes to FRS 102 as part of its first triennial review of the Standard to deal with issues highlighted in its implementation. The amendments were published in December 2017.  More recently amendments have been made in relation to phase 2 of the interest rate benchmark reform and also in relation to accounting for temporary rent concessions for operating leases occurring as a direct consequence of the COVID-19 pandemic extending beyond 30 June 2021 (for which an amendment was also made to FRS 105).  Amendments have also been recently made to FRS 101, FRS 102, FRS 104 and FRS 105 to reflect changes in company law following the UK's exit from the European Union and to FRS 101 as a result of the 2020/21 annual review of the standard.

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 30 June 2021. For those reporters who want to understand new UK GAAP application for earlier periods please select one of the following:

Pronouncement Effective date Application for quarters ending 30 June 2021?
1st qtrs.* 2nd qtrs.** 3rd qtrs.*** Full yrs****
FRS 100
Amendments to FRS 101 - 2018/19 cycle issued The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 100 shall be applied at the same time.

Mandatory (see #)

 Mandatory (see #) # #
Consequential amendments as a result of Amendment to FRS 101 – Effective date of IFRS 17 The amendments take effect for accounting periods beginning on or after 1 January 2023. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 100 shall be applied at the same time ~ ~ ~ ~
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

 Mandatory Mandatory See left See left
FRS 101
Amendments to the Basis for Conclusions FRS 101 Reduced Disclosure Framework

No effective date. No amendments to FRS 101 have been made

 N/A (see effective date column) N/A (see effective date column) N/A (see effective date column) N/A (see effective date column)
Amendments to FRS 101 - 2018/19 cycle issued

The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time.

 Mandatory (see #) Mandatory (see #) # #
Amendments to FRS 101 - 2019/20 cycle issued

Paragraph 8 of FRS 101 notes that the exemptions are available from when the relevant standard is applied. Therefore there is no need to amend the effective date for these amendments, which will be available for financial statements approved after the amendments have been finalised.

 Optional Optional Optional Optional
Changes the effective date of an amendment to the definition of a qualifying entity made in July 2019, effectively allowing relevant insurers to continue to apply FRS 101 for a further two years. The revised effective date for the new definition of a qualifying entity is accounting periods beginning on or after 1 January 2023 ~ ~ ~ ~

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

 Mandatory Mandatory See left See left

Paragraph 8 of FRS 101 notes that the exemptions are available from when the relevant standard is applied. Therefore there is no need to amend the effective date for these amendments, which will be available for financial statements approved after the amendments have been finalised

 % % % %
FRS 102
Amendments to FRS 102: Multi-employer defined benefit plans

The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.

Already applied in the prior year - April 2020

Already applied in the prior year - January 2020

Mandatory

Mandatory
Amendments to FRS 101 - 2018/19 cycle issued

The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 102 shall be applied at the same time

Mandatory (see #)

Mandatory (see #)

#

#
'Amendments to FRS 102 – Interest rate benchmark reform'.

The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.

Already applied in the prior year - April 2020

Already applied in the prior year - January 2020

Mandatory

Mandatory
Amendments to FRS 101 - 2019/20 cycle issued

Paragraph 8 of FRS 101 notes that the exemptions are available from when the relevant standard is applied. Therefore there is no need to amend the effective date for these amendments, which will be available for financial statements approved after the amendments have been finalised.

Optional

Optional

Optional

Optional
Consequential amendments as a result of Amendment to FRS 101 – Effective date of IFRS 17 The amendments take effect for accounting periods beginning on or after 1 January 2023. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 102 shall be applied at the same time ~ ~ ~ ~
Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions The effective date for these amendments is accounting periods beginning on or after 1 January 2020, with early application permitted. Already applied in the prior year - April 2020 Already applied in the prior year - January 2020 Mandatory Mandatory
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

 Mandatory Mandatory See left See left
‘Amendments to FRS 102 – Interest rate benchmark reform (Phase 2)’.

The amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted.

 Mandatory

Mandatory

 Optional Optional
Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions beyond 30 June 2021

The amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted.

 Mandatory Mandatory Optional Optional
FRS 104
Amendments to FRS 104 Interim Financial Reporting - Going concern The amendments are effective for interim periods beginning on or after 1 January 2021, with earlier application permitted Mandatory Mandatory Optional Optional
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

 Mandatory Mandatory See left See left
FRS 105
Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions The effective date for these amendments is accounting periods beginning on or after 1 January 2020, with early application permitted.

Already applied in the prior year - April 2020

Already applied in the prior year - January 2020

Mandatory

Mandatory
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Mandatory

Mandatory

See left

See left
Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions beyond 30 June 2021

The amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted.

Mandatory

Mandatory

Optional

Optional

* 1st quarter ending on 30 June 2021 (accounting period began on 1 April 2021).

** 2nd quarter ending 30 June 2021 (accounting period began 1 January 2021).

*** 3rd quarter ending 30 June 2021 (accounting period began 1 October 2020).

**** 4th quarter ending 30 June 2021 (accounting period began 1 July 2020).

# - The amendments to FRS 101 and the consequential amendments to FRS 100 and FRS 102 take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time. IFRS 17 has not yet been endorsed for use in the EU or the UK. If an entity applies the July 2019 amendments to FRS 101 early, the amendments to FRS 100 and FRS 102 are applied at the same time.

~ The amendments to FRS 101 and the consequential amendments to FRS 100 and FRS 102 take effect for accounting periods beginning on or after 1 January 2023. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time. IFRS 17 has not yet been endorsed for use in the EU or the UK. If an entity applies the July 2019 amendments to FRS 101 early, the amendments to FRS 100 and FRS 102 are applied at the same time.

% - a qualifying entity may take advantage of the exemption introduced by paragraph 8(iA) from when Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) is applied. Similarly, the amendments to paragraph AG1(h) of FRS 101 apply from when Classification of Liabilities as Current or Non-current (Amendments to IAS 1) is applied. These standards are yet to be endorsed for use in either the EU or the UK.

 

 

 

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Recording of EAA-EFRAG-IASB research workshop on the disclosure review ED

12 Jul, 2021

The International Accounting Standards Board (IASB) in conjunction with the European Accounting Association (EAA) and European Financial Reporting Advisory Group (EFRAG) held a virtual research workshop on 1 July 2021 that provided an overview of the IASB’s exposure draft (ED) ‘Disclosure Requirements in IFRS Standards — A Pilot Approach’. A recording of this workshop is now available.

On 25 March 2021, the IASB issued the ED that contains proposed guidance for itself when developing and drafting disclosure requirements in IFRSs in future as well as proposed amendments to IFRS 13 'Fair Value Measurement' and IAS 19 'Employee Benefits' that result from applying the proposed guidance to those standards.

The workshop provided an overview of the ED and was hosted by EAA President Thorsten Sellhorn with a presentation by the Board’s technical staff and EFRAG; an academic perspective from Vicky Kiosse (University of Exeter), Paul André (HEC Lausanne) and Andrei Filip (ESSEC Business School); and a Q&A session addressed by the presenters and Board Member Ann Tarca.

Recording of the pre­sen­ta­tion as well as the slide deck are now available on the IASB website.

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