The new TEG will be tasked with reviewing and assessing technical recommendations focused on enterprise value creation that will be developed the working group recently set up by the IFRS Foundation to prepare for a potential international Sustainability Standards Board (SSB). The working group's tasks also include planned work to further refine the prototype climate-related disclosure standard, its content, and industry-specific metrics. IOSCO has been invited to join the IFRS Foundation working group as an observer.

Please click to access the announcement of the new TEG on the IOSCO website.

The new EFRAG TEG members are Sylvie Koppes (Dutch), Malgorzata Matusewicz (Polish), and Pierre Phan Van Phi (French). The appointments of Ms Koppes and Ms Matusewicz are effective 1 April 2021, while Mr Phan Van Phi will begin his term on 1 May 2021.

For more information, see the press release on the EFRAG website.

The analysis builds on a review of the 2017, 2018 and 2019 annual reports of a sample of European issuers and on the evidence from supervision and enforcement activities undertaken by European enforcers on financial statements relating to financial years between 2014 and 2020.

The report was submitted to the IASB as part of the ESMA response to the post-implementation review of the three standards that the IASB is currently conducting.

Overall, the results show that the requirements of the standards have generally been well applied in the financial statements of the issuers in the sample. However, ESMA believes there is room for improvement in the level of compliance, comparability and transparency in the application of the requirements. In addition, ESMA notes that some aspect of the IFRSs can be improved to bring more clarity in areas where uncertainty in practice still exists.

Please click to access the full report on the ESMA website.

One of the awards is for ‘Communicating integrated thinking’, and is open to organisations that are demonstrating clearly, through communicating to their providers of financial capital, how sustainability is embedded into their overall strategy and decision making process, and how this integrated thinking is contributing to a sustainable business model which delivers long-term value.

Other categories recognise organisations who embed an integrated approach into their decision making; innovative projects; organisations who are leading change to the financial markets; and individuals who drive change through education, training and academia. In line with the rescheduled COP26, judges will also be selecting entries that demonstrate exceptional Climate Leadership, which will be selected from the finalists from across all the categories.

Founded by Institute of Chartered Accountants in England and Wales (ICAEW) and The Prince’s Accounting for Sustainability Project (A4S), and in partnership with Deloitte, these global awards recognise financial leadership in driving sustainable economies.

The 2019 finalists included Tesco (UK), ABN AMRO (Netherlands), Harvard Business School (US), Contact Energy (New Zealand) and PIMCO (US).

Find out more information about the Awards, including details on the judging process and how to enter (by 28 May), as well as case studies of last year’s winners at http://www.financeforthefuture.org/

Introduction

The request for information includes an introductory section that states the objective of the request for information and describes how responses will help the Board in determining its future work programme. The introduction also explains the difference between the IFRS Foundation's five-yearly review of structure and effectiveness that is currently underway and that includes a consultation on sustainability reporting and the IASB's agenda consultation. The IASB's agenda consultation seeks feedback on the priorities of activities within the current scope of the Board’s work, whereas the Trustees’ consultation seeks feedback on a potential expansion in the role of the IFRS Foundation. The IASB is currently working on its management commentary project and could do more on sustainability aspects, should stakeholders wish so, as long as this is connected to financial statements. While there is some connecting middle ground, respondents should not confuse the two initiatives. As the IFRS Foundation Trustees move forward quickly with their initiative, their decisions would be available before the Board makes decisions on its future agenda.

Request for information

The request for information consists of three parts: (1) strategic direction and balance of the Board's activities, (2) criteria for assessing the priority of projects that could be added to the work plan, and (3) financial reporting issues that could be added to the Board’s work plan.

Strategic direction and balance of the Board's activities

Part one of the request for information regarding the strategic direction and balance notes that the IASB's work is currently following six lines:

• New IFRS Standards and major amendments to IFRS Standards
• Maintenance and consistent application of IFRS Standards
• The IFRS for SMEs Standard
• Digital financial reporting and the IFRS Taxonomy
• Understandability and accessibility
• Stakeholder engagement

In this part of the request for views the IASB is seeking stakeholders’ views on whether the Board should increase, leave unchanged or decrease its current level of focus on each line of work. And while there is a little room for additional work, respondents are asked to assume that the Board’s overall level of resources will remain substantially unchanged during the 2022 to 2026 period.

Criteria for assessing the priority of projects that could be added to the work plan

Part two of the request for information regarding criteria for assessing the priority of projects that could be added to the work plan notes that the Board will use a specified list of seven criteria to assess the potential financial reporting issues that could be added to its work plan to develop new IFRS Standards and major amendments to IFRS Standards. They are:

• The importance of the matter to investors
• Whether there is any deficiency in the way companies report the type of transaction or activity in financial reports
• The type of companies that the matter is likely to affect, including whether the matter is more prevalent in some jurisdictions than others
• How pervasive or acute the matter is likely to be for companies
• The potential project’s interaction with other projects on the work plan
• The complexity and feasibility of the potential project and its solutions
• The capacity of the Board and its stakeholders to make timely progress on the potential project

The criteria are derived from the Due Process Handbook and the 2015 Agenda Consultation. The relative importance of any specific criterion will vary depending on the particular circumstances. Generally, the Board will evaluate potential project for its work plan primarily on the basis of whether the project will meet investors’ needs, while also taking into account the costs of producing the information.

Financial reporting issues that could be added to the Board’s work plan

Finally, part three of the request for information regarding financial reporting issues that could be added to the Board’s work plan refers to 22 projects that have frequently been suggested to the Board for consideration. The request for information seeks stakeholders’ views on what priority they would give each of the potential projects — high, medium or low — and whether their prioritisation refers to all or only some aspects included in the project description. Respondents are also invited to suggest additional issues that they believe the Board should add to its work plan for 2022 to 2026.

Appendices

For reasons of readability, some of the information referred to in the request for information has been relegated to appendices:

• Appendix A describes the active projects on the Board’s work plan as of March 2021
• Appendix B describes the 22 financial reporting issues that were frequently suggested to the Board for potential potential inclusion in its work programme
• Appendix C describes additional financial reporting issues that were suggested to the Board by only a small number of stakeholders

Comment deadline and next steps

Stakeholders are invited to provide feedback on the request for information by 27 September 2021. The Board expects to discuss the feedback in the second half of 2021 and to publish a feedback statement summarising the feedback and announcing the work plan for 2022 to 2026 in the first quarter of 2022.

Additional information

The following additional information is available on the IASB website and on IAS Plus:

• Press release on the IASB website
• Access to the request for information on the IASB website
• Investor Perspective article on the Agenda consultation (link to IASB website)
• Video with an overview of the Agenda consultation (four minutes, link to IASB website)
• Video on the strategic direction and balance of the Board’s activities (three minutes, link to IASB website)
• Video on potential projects that could be added to the IASB work plan (two minutes, link to IASB website)
• Need to know newsletter
• Our IAS Plus project page on the Agenda consultation 2020

Introduction

The request for information includes an introductory section that states the objective of the request for information and describes how responses will help the Board in determining its future work programme. The introduction also explains the difference between the IFRS Foundation's five-yearly review of structure and effectiveness that is currently underway and that includes a consultation on sustainability reporting and the IASB's agenda consultation. The IASB's agenda consultation seeks feedback on the priorities of activities within the current scope of the Board’s work, whereas the Trustees’ consultation seeks feedback on a potential expansion in the role of the IFRS Foundation. The IASB is currently working on its management commentary project and could do more on sustainability aspects, should stakeholders wish so, as long as this is connected to financial statements. While there is some connecting middle ground, respondents should not confuse the two initiatives. As the IFRS Foundation Trustees move forward quickly with their initiative, their decisions would be available before the Board makes decisions on its future agenda.

Request for information

The request for information consists of three parts: (1) strategic direction and balance of the Board's activities, (2) criteria for assessing the priority of projects that could be added to the work plan, and (3) financial reporting issues that could be added to the Board’s work plan.

Strategic direction and balance of the Board's activities

Part one of the request for information regarding the strategic direction and balance notes that the IASB's work is currently following six lines:

• New IFRS Standards and major amendments to IFRS Standards
• Maintenance and consistent application of IFRS Standards
• The IFRS for SMEs Standard
• Digital financial reporting and the IFRS Taxonomy
• Understandability and accessibility
• Stakeholder engagement

In this part of the request for views the IASB is seeking stakeholders’ views on whether the Board should increase, leave unchanged or decrease its current level of focus on each line of work. And while there is a little room for additional work, respondents are asked to assume that the Board’s overall level of resources will remain substantially unchanged during the 2022 to 2026 period.

Criteria for assessing the priority of projects that could be added to the work plan

Part two of the request for information regarding criteria for assessing the priority of projects that could be added to the work plan notes that the Board will use a specified list of seven criteria to assess the potential financial reporting issues that could be added to its work plan to develop new IFRS Standards and major amendments to IFRS Standards. They are:

• The importance of the matter to investors
• Whether there is any deficiency in the way companies report the type of transaction or activity in financial reports
• The type of companies that the matter is likely to affect, including whether the matter is more prevalent in some jurisdictions than others
• How pervasive or acute the matter is likely to be for companies
• The potential project’s interaction with other projects on the work plan
• The complexity and feasibility of the potential project and its solutions
• The capacity of the Board and its stakeholders to make timely progress on the potential project

The criteria are derived from the Due Process Handbook and the 2015 Agenda Consultation. The relative importance of any specific criterion will vary depending on the particular circumstances. Generally, the Board will evaluate potential project for its work plan primarily on the basis of whether the project will meet investors’ needs, while also taking into account the costs of producing the information.

Financial reporting issues that could be added to the Board’s work plan

Finally, part three of the request for information regarding financial reporting issues that could be added to the Board’s work plan refers to 22 projects that have frequently been suggested to the Board for consideration. The request for information seeks stakeholders’ views on what priority they would give each of the potential projects — high, medium or low — and whether their prioritisation refers to all or only some aspects included in the project description. Respondents are also invited to suggest additional issues that they believe the Board should add to its work plan for 2022 to 2026.

Appendices

For reasons of readability, some of the information referred to in the request for information has been relegated to appendices:

• Appendix A describes the active projects on the Board’s work plan as of March 2021
• Appendix B describes the 22 financial reporting issues that were frequently suggested to the Board for potential potential inclusion in its work programme
• Appendix C describes additional financial reporting issues that were suggested to the Board by only a small number of stakeholders

Comment deadline and next steps

Stakeholders are invited to provide feedback on the request for information by 27 September 2021. The Board expects to discuss the feedback in the second half of 2021 and to publish a feedback statement summarising the feedback and announcing the work plan for 2022 to 2026 in the first quarter of 2022.

Additional information

The following additional information is available on the IASB website and on IAS Plus:

• Press release on the IASB website
• Access to the request for information on the IASB website
• Investor Perspective article on the Agenda consultation (link to IASB website)
• Video with an overview of the Agenda consultation (four minutes, link to IASB website)
• Video on the strategic direction and balance of the Board’s activities (three minutes, link to IASB website)
• Video on potential projects that could be added to the IASB work plan (two minutes, link to IASB website)
• Our Need to know newsletter
• Our UK Accounting Plus project page on the Agenda consultation 2020

The new Board members are Olivier Scherer (accountancy profession se​​​at, French); Michael Fechner (corporate sector seat, German); Roman Sauer (insurance sector seat, German); Serge Pattyn (user seat, Belgian); and Gerhard Prachner (AFRAC, Austria). Serge Pattyn has also been appointed EFRAG Board Vice-President.

The new members will begin their three-year terms on 1 May 2021. They replace Hans Buysse (EFRAG Board Vice-President), Luca Cencio​​​ni, Benoit Jaspar, Claes Norberg, Laurence Rivat and Mark Vaessen.

For more information, see the press release on the EFRAG website.

Part of the process involves seeking views from stakeholders on those areas that might be considered as part of the review.  In addition to stakeholder feedback the review will consider recent developments in financial reporting (such as changes in IFRS) and relevant developments in the wider reporting framework.  Any changes to accounting standards that are proposed as a result of the periodic review will be subject to public consultation at a later date, not expected to be before 2022.  The effective date for any amendments is currently expected to be 1 January 2024. 

Stakeholders are asked to provide comments by 31 October 2021.  The FRC expects to hold roundtable events for stakeholders to provide their views and will be issuing further information in due course.

Further information is available on the FRC website.

The IFRS Foun­da­tion is seeking two Trustees: one from the Americas and one from the Asia-Oceania. Trustees’ re­spon­si­bil­i­ties include oversight of the organisation in the public interest, its strategic direction, ap­point­ments to the Board, the IFRS In­ter­pre­ta­tions Committee and the IFRS Advisory Council, and ensuring the financing of the organisation and approving its budget. The role de­scrip­tion notes:

Please click to access the press release on the IASB website.

The podcast discusses:

• Extensions to comment periods for three of the Board’s current consultations.
• Goodwill and Impairment project.
• Primary Financial Statements project.
• Request for Information Comprehensive Review of the IFRS for SMEs Standard.
• Equity Method research project.

The podcast (14 minutes) 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 regular meeting and supplementary meeting.