In our response to the discussion paper, we support the Board’s initiative to assess whether information provided to investors on business combinations can be improved, including by setting clearer disclosure objectives. However, we are not convinced that the proposals in the discussion paper would result in disclosures that provide more useful information to users of the financial statements. We believe that additional work is required to understand more precisely what additional information is needed by investors and why it is needed, and what information is currently prepared by management to monitor the impact of business combinations.

Also, we do not support the preliminary view of the Board not to reintroduce amortisation of goodwill. Whilst we continue to recognise the conceptual merits of the impairment-only model, we note that there continues to be a perception that too little impairment is recognised too late. Finally, without the reintroduction of goodwill amortisation, we strongly diagree with the proposal to remove the requirement to perform a quantitative impairment test every year.

Download the full comment letter here.

Below is an analysis of all changes made to the work plan since our last analysis on 20 November 2020.

Stan­dard-set­ting projects

• Dis­clo­sure ini­tia­tive — Targeted Standards-level Review of Disclosures — Project recategorised from maintenance projects to standard-setting project.
• Financial instruments with characteristics of equity — the work plan still has this as a research project although the Board decided at its December meeting to move it to the standard-setting programme to be able to publish an exposure draft; no expected date for the exposure draft is given.
• Primary Financial Statements — after discussing the feedback to the exposure draft, a decision on the project direction is now expected in January 2021.

Main­te­nance projects

• Accounting policies and accounting estimates (Amend­ments to IAS 8) — the issuance of final amend­ments is now expected in February 2021 (pre­vi­ously first quarter of 2021).
• Dis­clo­sure ini­tia­tive — Accounting policies — the issuance of final amend­ments is now expected in February 2021 (pre­vi­ously first quarter of 2021).
• Lease Liability in a Sale and Leaseback — an exposure draft of proposed amendments was published on 27 November 2020 and the feedback on the exposure draft is expected to be discussed in the first half of 2021.

Research projects

• Business combinations under common control — a discussion paper was published on 30 November 2020 and the feedback on the discussion paper is expected to be discussed in the second half of 2021.
• Ex­trac­tive ac­tiv­i­ties — a decision on the project direction is now expected in the second quarter of 2021 (pre­vi­ously first quarter of 2021).
• Pension benefits that depend on asset returns — the review of the research was first discussed at the IASB's December 2020 meeting and detailed analysis is expected in February 2021.
• Post-implementation review of IFRS 10, IFRS 11 and IFRS 12 — the request for information was published on 9 December 2020 and discussion of the feedback is expected to begin in the second half of 2021.
• Post-implementation review of IFRS 9 — Classification and Measurement — the request for information is expected in the second half of 2021.
• Second comprehensive review of the IFRS for SMEs Standard — this is the new name of the 2019 Comprehensive Review of the IFRS for SMEs Standard project, which has also been recategorised from maintenance project to research project; after the IASB's discussion of the feedback to the request for information at its December 2020 meeting, a decision on the direction of the project expected in the first quarter of 2021.

Other projects

• IFRS Taxonomy Update — 2020 General Improvements and Common Practice — the feedback on the proposed IFRS Taxonomy Update is now expected in February 2021 (previously first quarter of 2021).
• IFRS Taxonomy Update — Amend­ments to IAS 1, IAS 8 and IFRS Practice Statement 2 — while a proposed Taxonomy Update was pre­vi­ously expected in the first quarter of 2021, the work plan now states that an "IFRS Amendment" is now expected in February 2021.
• IFRS Taxonomy Update — Common practice (IAS 19) — after a proposed IFRS Taxonomy Update was published on 24 November 2020 discussion of the feedback received is expected in February 2021.
• IFRS Taxonomy Update — Interest Rate Benchmark Reform — Phase 2 — Removed from the work plan since the final Taxonomy Update was published on 17 December 2020.

The above is a faithful com­par­i­son of the IASB work plan at 20 November 2020 and 18 December 2020. For access to the current IASB work plan at any time, please click here.

In addition to the recent major developments reported separately on our sustainability and integrated reporting site, the following smaller developments occurred recently:

• The World Business Council for Sustainable Development (WBCSD) has published the eighth edition of Reporting matters – WBCSD’s annual review of its member companies’ sustainability and integrated reports. Please click to access the publication through the press release on the WBCSD website.
• The International Integrated Reporting Council (IIRC) has released a report investigating the extent to which investors and analysts value non-financial information, the ways they use it and the benefits they see from integrated reporting. Please click to access the publication through the press release on the IIRC website.
• The IIRC also announces the launch of the revised <IR> Framework in January 2021. Please see this press release for more information.
• Climate Action 100+ has released its 2020 progress report. One section of the report (p. 13 ff.) also deals with disclosures. Please click to access the report through the press release on the Climate Action 100+ website.
• At its last meeting, the Board of the International Organization of Securities Commissions (IOSCO) considered the IFRS Foundation's Trustees' sustainability consultation and agreed that the IOSCO Sustainable Finance Task Force should further explore engaging with the IFRS Foundation to ensure that any proposals stemming from the consultation paper meet securities regulators’ expectations both in terms of content and governance. Please see the press release on the IOSCO website for more information.
• The latest report released by the Climate Disclosure Standards Board (CDSB), The state of EU environmental disclosures in 2020 analyses the strength and weaknesses of disclosure among 50 largest companies in the European Union under the EU Non-Financial Reporting Directive (NFRD). Please click to access the publication through the press release on the CDSB website.
• The CDSB website also offers access to a series of briefings around the disclosure under the NFRD. They can be accessed here.
• In addition, the CDSB and the United Nations Sustainable Stock Exchanges (SSE) initiative have formalised their long term and ongoing collaboration and cooperation with an official Exchange of Letters. The announcement is available on the SSE website.
• The US Securities and Exchange Commission’s (SEC’s) Asset Management Advisory Committee recently published its recommendations on Environmental, Social and Governance (ESG) disclosure. The recommendations focus on the adoption of ESG standards for disclosures and ESG investment products. Please click to access a draft of the recommendations on the SEC website.
• The Sustainability Accounting Standards Board (SASB) has issued a staff bulletin on human capital management disclosure. The bulletin provides an overview of the human capital-related topics and metrics in SASB’s 77 industry-specific standards to assist companies in preparing human capital-related disclosures. Please click for more information in the press release on the SASB website.
• The UK Government has announced its intention to mandate climate disclosure by large companies and financial institutions across the economy by 2025. The announcement is available on the Government website.
• The Accounting Bodies Network of the Prince of Wales' Accounting for Sustainability project (A4S) has published a statement of support agreeing with the IASB that existing standards should be applied to climate-related and other emerging risks. The statement of support is available on the A4S website.
• The Alliance for Corporate Transparency has published joint position on the reform of the EU NFRD setting out seven recommendations. Please click for the list of recommendations and access to the full joint position on the Alliance for Corporate Transparency website.
• Accountancy Europe has released a podcast discussing what is being done on the side of accountants to accommodate sustainability into corporate reporting. The podcast can be accessed on the Accountancy Europe website.
• The following new translations are available (links to the organisations' websites):
  
  • Global reporting initiative (GRI): GRI 306 Waste 2020 now also available in Arabic, Traditional Chinese, French, German, Italian, Japanese, Portuguese, and Spanish and the full set of GRI standards now also available in Portuguese;
  • WBCSD guidance framework and checklist tool on the COVID-19 business recovery now also available in Spanish; and
  • SASB implementation guidance for companies now also available in French, German, Japanese, and Spanish.

The guide is primarily directed at preparers of larger private and smaller listed company accounts but may be useful to other preparers as well. The guide is not intended to be a comprehensive list of all areas that should be considered. It covers:

• New reporting requirements such as amendments to IFRS Standards.
• Areas of heightened focus including:
  • Going concern and viability.
  • Brexit.  The The ICAEW Financial Reporting Faculty has produced a short guide specifically covering Brexit considerations available on the ICAEW website. 
  • Impairment testing.
  • Non-financial reporting including Streamlined and Energy and Carbon reporting requirements and Section 172 reporting.
  • Reporting of the effects of climate change.
  • Presenting the impact of COVID-19.
  • Disclosures and decisions around dividends.
  • Judgements and estimates disclosures.

Guidance is also provided on planning for the year-end audit and areas that need to be factored into the year-end planning process.

The full guide is available on the ICAEW website.

The outreach events are scheduled between 13 and 22 January 2021 and will consist of speakers from the public sector, private sector, SMEs and civil society from across Europe.

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

Note: On 11 January 2021, EFRAG released a background paper for the outreach events beginning on 13 January. Please click to see the background paper here.

Similar to most other respondents, Accountancy Europe calls for global non-financial reporting standards and sees the IFRS Foundation in the best position to achieve this. The comment letter states:

We fully support setting up a sustainability standards board (SSB) to address NFI reporting, in parallel with the International Accounting Standards Board (IASB). The SSB would benefit from the global acceptance and applicability, oversight and due process of the IFRS Foundation.

Nevertheless, the letter also sets out a few point that Accountancy Europe believes merit further consideration by the IFRS Foundation:

• Interconnected standard setting following a clear vision;
• a two-stage approach to materiality;
• collaboration with global and European stakeholders; and
• building upon the work of existing initiatives such as CDP, CDSB, GRI, IIRC, and SASB.

Please click to access the full comment letter on the Accountancy Europe website.

This Taxonomy update includes elements to reflect the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 introduced by Interest Rate Benchmark Reform — Phase 2 issued in August 2020.

For more information, see the press release and Taxonomy update on the IASB’s website.

In their response to the consultation, the Chairs of the ESAs agree that improving data availability and public disclosure by corporates is a key element to foster sustainable growth, and strongly support the development of globally accepted non-financial reporting standards to facilitate the disclosure of meaningful and comparable metrics on environmental, social and governance aspects. They also support that international standards should build on existing jurisdictional and international initiatives, including those of the European Union. The comment letter notes:

Whilst the ESAs are fully committed to support the European Commission in the further development of the Taxonomy Regulation and the Non-Financial Reporting Directive for the European Union, the ESAs strongly support the development of globally accepted non-financial reporting standards.

The ESAs also note it is important that the standards to be developed cater for jurisdictions at different stages of development in the area of sustainable finance. ESMA's letter adds that this could be achieved by developing a common basis consisting of a globally accepted set of standards that, if necessary, could be complemented at the level of individual jurisdictions to fulfil any additional jurisdiction-specific obligations.

ESMA also points out that there are three principles to take into account when establishing a standard-setter in this area: independent governance, public-sector oversight and ability of the disclosure standards to promote investor protection. The comment letter notes:

ESMA believes that the IFRS Foundation is well placed to implement a standard-setting solution for non-financial reporting that is in line with the above-mentioned principles. ESMA notes that the IFRS Foundation could also leverage on its role in financial reporting to help build the much-needed connectivity between financial and non-financial reporting.

Please click to access the full comment letters below:

• ESAs joint comment letter on the EBA website
• ESMA comment letter on the ESMA website

This issue features:

• Spotlight — Reflecting on the financial reporting challenges stemming from COVID-19.
• In Profile — Florian Esterer, Head of Core Equities, Bank J Safra Sarasin and member of the Capital Markets Advisory Committee
• We need your views
• Stay up to date
• Resources for investors

The Investor Update newslet­ter is available on the IASB’s website.

The Government believes there are opportunities to improve the way financial information is filed with, and published by, Companies House. It is seeking to deliver benefits for those filing information, the users of that information, for Companies House and for the rest of government.

The headline proposals are to:

• Shorten the time limits for filing annual accounts at Companies House from six months to three months for public companies (plcs) and from nine months to six months for private companies;
• Require all accounts filings to be digital with full i-XBRL tagging;
• Introduce a ‘file with government once’ approach which would also cover tax filings;
• Require directors to make a formal declaration of entitlement to small and micro company accounting exemptions;
• Remove some small and micro company exemptions; and
• Give Companies House greater powers to make checks on financial information.

The proposals in the consultation seek to:

• Deliver efficiencies for filers, users and Companies House by requiring digital submission of accounts in a machine-readable format, bringing the UK into line with global best practice;
• Expand the use of tagging standards to make comparison and bulk analysis of accounts simpler for investors and assist businesses seeking investment;
• Simplify the multiple processes for filing financial information across Companies House and HMRC systems, and explore opportunities for filing financial information once with government;
• Tackle fraud and error by closing known loopholes in filing requirements and address problems of companies filing the wrong set of accounts;
• Improve the quality and value of information on the register by reviewing the timescales for delivering accounts and exploring options to improve how information is displayed; and,
• Require additional information to be submitted with accounts to improve their statistical and analytical value.

The consultation sets out proposals under three themes:

How information is submitted to Companies House

The first part of the consultation focuses on how accounts are delivered to Companies House and includes:

• Proposed new timescales for accounts to be filed. It is proposed to cut the time limit for filing accounts from six months to three months for a plc and from nine months to six months for a private company. The Government states that this will improve accuracy as financial information is often significantly out of date before it is filed with Companies House.
• Options for progressing towards filing once with government which would also cover tax filings where the same set of accounts would be received by both Companies House and HMRC.
• Proposals to require accounts to be delivered digitally and to introduce full tagging of accounts in line with the requirements that are already in place when filing with HMRC. The consultation indicates that this will be an important step towards any future plans for companies to be able to file once with the government.

What information should be filed at Companies House

This part of the consultation outlines the information that is currently required by Companies House and asks whether further information might improve the value of the register. It includes:

• A proposal that company directors should confirm the company’s eligibility to file small or medium-sized accounts under Part 15 of the Companies Act. Under the proposals all three threshold conditions set out in Part 15 of the Act (turnover, balance sheet and number of employees) will be required to be disclosed by all companies. It is proposed that the director(s) will have to confirm that the company meets the threshold conditions to file under the regime being used. In the case of dormant accounts being filed, it is proposed that the declaration will confirm that the company is not trading and meets the criteria for filing dormant accounts.
• Proposals which will also see Companies House introduce validation checks to ensure that the threshold conditions match the requirements for the filing regime being used. Additionally the Government proposes to create an offense if a false declaration is made by director(s).
• Proposals for revising the small company accounts filing options. These include proposals to:
  • Remove the current filing exemptions whereby small and micro companies do not need to file their profit and loss account.
  • Require micro entities to provide more information in accounts filed at Companies House.
  • Abolish ‘abridged accounts’ which enable small companies to omit some information from their profit and loss account and balance sheet prepared for members and for filing.

What Companies House does with this information

The final part of the consultation explores what Companies House should do with information it receives in accounts. It:

• Sets out proposals to increase the checking of accounts. This would include a check by Companies House to ensure that the information provided is coherent, complete for a company of that size/type and consistent with accounts submitted to other relevant agencies.
• Asks for views on how financial information could be better displayed on the register.

Responses are requested by 3 February 2021.

A press release and the full consultation are available on the BEIS website.