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GHG Protocol releases draft summaries of Scope 3 Standard feedback

15 Mar, 2024

The Greenhouse Gas (GHG) Protocol secretariat has released a draft summary report providing a detailed overview of stakeholder feedback from a survey it conducted on its Scope 3 Standard. In addition, the secretariat has released a proposal summary giving an overview of proposal submissions related to the Scope 3 Standard.

The inclusion of feedback in the summaries does not indicate that a recommendation will be implemented or reflected in updates to either the Scope 3 Standard or Scope 3 Technical Guidance. Instead, the GHG Protocol secretariat and governance bodies are prioritising which topics to address in the update process, including the scope of work for updates and additional guidance and resources.

According to the draft summary report, the aim of any updates will be to align with best practice approaches to ensure that the GHG Protocol standards for corporate accounting and reporting are effective in providing a rigorous and credible accounting foundation for businesses to measure, plan, and track progress toward science-based and net-zero targets in line with the global 1.5°C goal. Any future updates will seek harmonisation and interoperability with accounting rules under development through major disclosure initiatives.

The review period for the summaries is open until 15 April 2024.  

Please click to access the following on the GHG Protocol website:

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FRAB minutes and sypporting documents for November 2023 meeting made available

14 Mar, 2024

The associated documents and minutes of the Financial Reporting Advisory Board’s (FRAB’s) meeting on 23 November 2023 have been made available on the HM Treasury website.

Key topics dis­cussed during the November 2023 meeting in­cluded:

  • An update on the 2022-23 reporting cycle.
  • A National Audit Office (NAO) update to FRAB.
  • A User Preparer Advisory Group update.
  • An update on the them­atic review of valu­ation of non-in­vest­ment assets.
  • An update from the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Local Authority (Scotland) Accounts Advisory Committee.
  • The treatment of local government pensions within health accounts.
  • An update on the Financial Reporting Manual (FReM) 2023-24 and FReM 2024-25.
  • A sustainability reporting update including the Task Force on Climate-related Financial Disclosure (TCFD) recommendations exposure draft.
  • An update on the Performance Reporting thematic review.
  • An update on FRAB strategy, action plan and risk register.
  • An update on IFRS Interpretations Committee meetings since the last FRAB Board meeting.

The as­so­ci­ated doc­u­ments for the November 2023 meeting are avail­able on the HM Treasury wesbite.

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UKEB announces new Board appointments

14 Mar, 2024

The UK Endorsement Board (UKEB) has announced the appointment of two new Board members, effective from 1 March.

Nine existing Board members have also been reappointed for a second term, effective from 15 March.  One Board member will also step down when the term ends on 14 March.

Further information is available on the UKEB website.

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IASB proposes enhanced information on acquisitions

14 Mar, 2024

The International Accounting Standards Board (IASB) has published an exposure draft IASB/ED/2024/1 'Business Combinations — Disclosures, Goodwill and Impairment (Proposed amendments to IFRS 3 and IAS 36)'. Comments are requested by 15 July 2024.

 

Background

This project results from the post-implementation review of IFRS 3 Business Combinations.

The feedback on the post-implementation review had revealed that impairment of goodwill is not always recognised in a timely fashion and that disclosures required by IFRSs do not provide enough information to understand whether the acquired business is performing as was expected at the time of the acquisition. There were also comments that the impairment test required for goodwill under IAS 36 Impairment of Assets is costly and complex.

The IASB therefore decided to investigate possible improvements to IFRS 3 Business Combinations and IAS 36 and a discussion paper was published on 19 March 2020.

The exposure draft published today considers feedback received on the discussion paper and proposes amendments to IFRS 3 and IAS 36 that aim at providing users with information that would allow them to better assess the performance of an entity’s business combinations and how efficiently and effectively management has used the entity’s economic resources to acquire these businesses.

 

Suggested changes

The proposed amendments in exposure draft IASB/ED/2024/1 Business Combinations — Disclosures, Goodwill and Impairment (Proposed amendments to IFRS 3 and IAS 36) are:

Proposed amendments to IFRS 3

  • For strategic business combinations, which are a subset of material business combinations and are identified using a set of thresholds in IFRS 3, an entity would be required to provide information about its acquisition-date key objectives and related targets for the business combination and whether these key objectives and related targets are being met. An entity would only have to disclose information that is reviewed by its key management personnel.
  • Entities would be exempted from disclosing some of the information if that information is commercially sensitive or would expose the entity to litigation risk.
  • The exposure draft includes several other proposed amendments to the disclosure requirements in IFRS 3, including new disclosure objectives and disclosure requirements around expected synergies the strategic rationale for the business combination.

Proposed amendments to IAS 36

  • The IASB proposes amendments to the impairment test in IAS 36 to reduce shielding by clarifying how to allocate goodwill to cash-generating units.
  • Other proposed amendments regard the disclose in which reportable segment a (group of) cash-generating unit is included and how an entity calculates an asset’s value in use. 

Other proposed amendments

  • The exposure draft also proposes to amend the forthcoming IFRS 19 regarding disclosures about the strategic rationale for a business combination, the expected synergies, the contribution of the acquired business and the discount rate used in calculating the value in use.

    Comments on the proposed changes are requested by 15 July 2024.

     

    Effective date

    The IASB will decide on the effective date for the proposed amendments after exposure. The IASB proposes to require an entity to apply the amendments retrospectively. Earlier application would be permitted.

     

    Additional information

    Please click for:

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      EFRAG publishes February 2024 issue of EFRAG Update

      12 Mar, 2024

      The European Financial Reporting Advisory Group (EFRAG) has published an ‘EFRAG Update’ summarising public technical discussions held and decisions made during February 2024.

      The update reports on the EFRAG Governance and Due Process -Administrative Board meeting on 27 February 2024, EFRAG Financial Reporting Board (EFRAG FRB) and EFRAG Sustainability Reporting Board (EFRAG SRB) joint meeting on 28 February 2024, EFRAG Financial Reporting Technical Expert Group (EFRAG FR TEG) and EFRAG Sustainability Reporting Technical Expert Group (EFRAG SR TEG) joint meeting on 15 February 2024, EFRAG FRB meeting on 29 February 2024 and EFRAG FR TEG meetings on 14 February and 15 February 2024.

      The update also lists EFRAG publications issued in February including:

      Please click to download the February 2024 EFRAG Update from the EFRAG website.

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      Agenda for the March 2024 ASAF meeting

      12 Mar, 2024

      The IFRS Foundation has released an agenda and meeting papers for the meeting of the Accounting Standards Advisory Forum (ASAF), which will be held in London on 25-26 March 2024.

      A summary of the agenda is set out below:

      Monday 25 March 2024 (10:15-17:30)

      • Agenda planning and feedback from previous ASAF meetings
      • Subsidiaries without public accountability: disclosures
      • Rate-regulated activities
      • Post-implementation review of IFRS 9 — impairment
      • Amendments to the classification and measurement of financial instruments

      Tuesday 26 March 2024 (9:00-13:15)

      • Post-implementation review of IFRS 15 Revenue from Contract with Customers
      • Climate-related and other uncertainties in the financial statements
      • EFRAG project on variable consideration
      • Financial instruments with characteristics of equity

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

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      C&S annual report reveals increase in sustainability policies

      12 Mar, 2024

      Carrots & Sticks (C&S) has published the 2023 edition of its annual report, which presents a comprehensive assessment of environmental, social and governance (ESG) and sustainability policy worldwide. The report highlights the expanding nature of ESG and sustainability policies since 2020.

      The report provides analyses over 2,463 policies from 132 countries, 76 international and regional organisations from 1897 to the present day. The report notes a steep rise in voluntary policies since the UN Sustainable Decelopment Goals (SDGs) were launched in 2015.

      According to the report, there is a dominance of government entities as policy issuers and a prevalence of voluntary (over mandatory) policies. Most policies fall into the "low restrictiveness" category, which suggests limited power of enforcement.

      The full report is available on the C&S website.

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      Pre-meeting summaries for the March 2024 ISSB meeting

      11 Mar, 2024

      The ISSB will meet in Frankfurt on 13 March 2024. We have posted our pre-meeting summaries for the meeting that allow you to follow the ISSB’s decision making more closely. We summarised the agenda papers made available by the ISSB staff and point out the main issues to be discussed by the ISSB and the staff recommendations.

      The following topic is on the agenda:

      ISSB consultation on agenda priorities: The ISSB will discuss the strategic direction of its activities. The staff recommends the following level of focus placed on each activity: a high level of focus on ‘supporting the implementation of IFRS S1 and IFRS S2’; a slightly lower, but equal level of focus on each ‘enhancing the SASB standards’ and ‘beginning new research and standard-setting projects’ when compared to ‘supporting the implementation of IFRS S1 and IFRS S2’; no specific level of focus on activities related to connectivity, interoperability and stakeholder engagement as these are all fundamental to the work the ISSB will perform in other activities; and reserved capacity for flexibility in the ISSB’s work to allow for the consideration of emerging issues and to support the IASB on projects/activities, as necessary.

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

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      IFRS Interpretations Committee holds March 2024 meeting

      11 Mar, 2024

      The IFRS Interpretations Committee (IFRS IC) met in London on 5 March 2024. The IFRS IC discussed the finalisation of two agenda decisions and gave input into one IASB project.

      Finalisation of agenda decision—IAS 37 Provisions, Contingent Liabilities and Contingent Assets—Climate-related Commitment: In its November 2023 meeting, the IFRS IC discussed a submission asking its views on how IAS 37 applies to climate-related commitments to a fact pattern where an entity, which is a manufacturer of household products, publicly states a net-zero transition commitment. The manufacturer published a detailed plan for the modification of the manufacturing method to achieve 60% reduction in emissions in nine years and to buy carbon credits to offset its remaining emissions after those nine years. The IFRS IC concluded that whether there is a constructive obligation depends on different facts and circumstances. The present obligation and probable outflow criteria are satisfied only after nine years and thereafter as the entity emits greenhouse gases. 43 comment letters were received and most of the respondents agreed with the technical analysis in the tentative agenda decision and agreed not to recommend that the IASB consider adding a standard-setting project to the work plan. The IFRS IC decided to finalise the agenda decision and suggested changes to the drafting of the agenda decision. 

      Finalisation of agenda decision—IFRS 3 Business Combinations—Payments Contingent on Continued Employment during Handover Periods: In its September 2023 meeting, the IFRS IC received a submission about how an entity accounts for payments (as part of the acquisition agreement) to the sellers of an acquired business. The payments and continued employment aim to ensure the appropriate transfer of knowledge from the sellers to the new management team. The sellers are remunerated for their services at a level comparable to other management executives, but some of the consideration for the shares is withheld until the handover is complete and is forfeited if the individual leaves employment before completion of the handover. The sellers are also entitled to additional payments that are contingent upon meeting a specified level of financial performance and the continued employment during a limited period. The IFRS IC concluded that the evidence it gathered did not indicate that there is significant diversity in the accounting treatment and entities apply the accounting described in the agenda decision published in January 2013. 11 comment letters were received and most of the respondents agreed with the technical analysis in the tentative agenda decision. The IFRS IC decided to finalise the agenda decision.

      IFRS IC input to IASB projects—Post-implementation Review of IFRS 9 Financial Instruments—Impairment: IFRS IC members provided their input to the IASB’s post-implementation review (PIR) of the impairment requirements in IFRS 9—specifically, on application matters related to determining expected credit losses (ECL) for intragroup financial instruments, loan commitments, financial guarantee contracts and purchased or originated credit-impaired (POCI) financial assets.

      More In­for­ma­tion

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

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      March 2024 IASB meeting agenda posted

      08 Mar, 2024

      The IASB has posted the agenda for its next meeting, which will be held in its offices in London on 18–21 March 2024. There are 11 topics on the agenda.

      The Board will discuss the following:

      • Work plan update
      • Post-implementation review of IFRS 9 — Impairment
      • Power purchase agreements
      • Second comprehensive review of the IFRS for SMEs Standard
      • Climate-related and other uncertainties in the financial statements
      • Maintenance and Consistent Application
      • Post-implementation review of IFRS 15 — Revenue from contracts with customers
      • Equity method
      • Management commentary — Project direction
      • Catch-up exposure draft of the 'Subsidiaries without Public Accountability Standard'
      • Rate-reg­u­lated ac­tiv­i­ties

      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.

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