The survey is intended be completed by insurers that prepare accounts using IFRS and that are incorporated in the UK. Insurers that are part of a group headed by UK - incorporated entity are requested to respond to the survey from the perspective of the consolidated group. Stand-alone insurance entities and insurance entities that are part of group headed by an entity incorporated outside the UK should respond to the survey from the perspective of the UK incorporated entity (or UK sub- group where applicable).

The survey is open until 29 October 2020. 

Further information and the survey are available on the FRC website.

In addition to updating all existing taxonomies (except for the Irish Extensions which remain as per the 2019 version), the FRC has published a new taxonomy called the UKSEF which can be used for UK reporting purposes to Companies house and HMRC.  It is a UK version of the ESEF Taxonomy and overseas entities wishing to file with Companies House need to use the UKSEF to file, since it contains the extra tags needed to file in the UK.

Key changes to the 2021 suite include: 

• Enablement of revised accounts due to disruption caused by COVID-19.
• Covid Issues: additional income-related tags to cover the Coronavirus Jobs Retention Scheme (CJRS) and other Covid-related grants have been added.
• Off Payroll Working: additional tags have been added to cover revenue from off payroll working and off payroll working expenses. These new tags have been added for all entry-points (FRS 101, FRS 102, UK IFRS and Charities).
• Pay Ratio Regulations: The Statutory Instrument The Companies (Miscellaneous Reporting) Regulations 2018 sets out requirements for the reporting of pay ratio information in the Directors’ Remuneration Report. All entry-points have been amended to cover these requirements.
• SECR Reporting:  The SECR Taxonomy introduced in 2019 supersedes the greenhouse gas emissions reporting items present in the Directors’ Report. These tags have been removed (not deprecated, to avoid confusion with the SECR reporting requirements).

In addition, SECR reporting is an additional requirement for (large) companies who may choose to report using UK SEF. Consequently, the SECR taxonomy has been incorporated into the UKSEF taxonomy extension for the convenience of filers. This will avoid the complication of additional combined entry-points.

The 2021 suite represent the most up to date version of the FRC Taxonomies and as such should be used to comply with HMRC requirements to fully tag.  The suite has been designed with full tagging in mind.  Accounts should be fully tagged, except for consolidated UKSEF data where regulations permit minimum tagging. Filers to Companies House should use the most-up to date version where possible.  It is expected that both HMRC and Companies House will have enabled this suite by April 2021. .

The press release and updated taxonomies are available on the FRC website.

The five standard setters found that even among their group of five there were different perspectives on the accounting for intangibles - some seeing the difference between book value and market value of a company as a problem, some seeing the difference between book value and market value as a problem that can be solved by disclosures, some seeing no problem in the difference between book value and market value. The purpose of the presentation was to provide a balanced discussion of the alternative perspectives to support community-wide consideration of the issues and stimulate relevant academic research.

FASB Board member Christine Botosan presented the view of those that believe there is a problem, which needs resolving by additional recognition of intangibles. Her arguments included:

• Failure to recognise important intangible items understates book value of equity and financial performance;
• failure to recognise important intangible items reduces the relevance of financial statements;
• recognition of some amount is better than no recognition:
  • Measurement challenges should not preclude recognition; and
  • verifiability concerns should not preclude recognition.

Ms Botosan also commented on measurement bases and their application to intangible assets. She differentiated between "in-exchange" assets that are used on a standalone basis and readily convertible to cash and "in-use" assets that are used in combination and not readily convertible to cash. Ms Botosan noted that most intangible items are "in-use" an that the relevant measurement basis should be historical cost or replacement cost. However, these costs are difficult to determine. Similarly, determining the fair value of intangible assets is difficult as intangible assets tend to be unique.

Kelly Khalilieh, Director of Accounting Standards at AcSB Canada, presented the view of those that believe there is no problem or not a problem that cannot be solved by additional disclosures. She noted that research shows that financial information is not declining in relevance and that it is not the objective of financial statements to show the market value of a company. Ms Khalilieh explored the benefits  of mandatory and voluntary disclosures. She noted that mandatory disclosures could be subject to audit and would be comparable and consistent. Voluntary disclosures would provide greater flexibility and would allow for more tailored disclosures. On possible disclosures she noted the following:

• Disaggregated information on expenditures of intellectual capital (“future-orientated intangibles”),
• an additional classification for “intangible activities” in the cash flow statement;
• a statement of intangible assets or intellectual capital flows; and
• an explanation in the notes of expenditures on intangible items.

Outside of financial statements she suggested to link intangible activities to the discussion of the organisational strategy and objectives and to supplement it with human capital metrics.

The paper of the five standard setters is currently under review at an academic accounting journal.

The podcast discusses:

• Management Commentary;
• Rate-regulated Activities;
• Business Combinations under Common Control;
• Extractive Activities; and
• Maintenance and consistent application.

The podcast (12 minutes) can be accessed through the press release on the IASB website.

The detailed notes taken by Deloitte observers at the meeting are available here.

We support the Board’s initiative to improve how information is communicated in the financial statements, in particular the information included in the statement of profit or loss. However, we strongly disagree with the proposals on unusual items and on management performance measures (MPMs).

In addition, we support the objective of improving comparability. However, we believe that this objective will be achieved only if the underlying principles for the determination of the operating category proposed for the statement of profit or loss are expressed more clearly.

Lastly, we disagree with two proposals on classification of items in the statement of profit or loss and the proposal to present income and expenses from cash and cash equivalents as part of financing activities.

Click to view the comment letter.

The event will have a wide range of high-level speakers and will be seeking input from the community of interested stakeholders on the IASB’s preliminary views included in the Discussion Paper Business Combinations —  Disclosures, Goodwill and Impairment and the EFRAG’s Draft Comment Letter.

Please click for more in­for­ma­tion and reg­is­tra­tion for the event on the EFRAG website.

We are supportive of the overall approach to reflect the International Accounting Standards Board’s (IASB) proposals in ED/2020/1 Interest Rate Benchmark Reform – Phase 2: Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (ED) in FRS 102 to the extent relevant in order to ensure the amendments are available to all entities on a timely basis and that no significant deviations occur between the International Financial Reporting Standards (IFRS) and UK Generally Accepted Accounting Practice (UK GAAP). As part of finalising the Phase 2 amendments (the final amendments) the IASB made some important changes to the original proposals in the ED that FRED 74 is based on. We believe some of these changes should be reflected in FRS 102 and have included our recommendations in the answer to Question 1 in the Appendix to the comment letter.

We support the key amendments proposed in FRED 74 that ensure that entities that apply hedge accounting will continue to do so as they transition to alternative benchmark rates and entities can apply the practical expedient to account for changes in the basis for determining contractual cash flows of a financial asset or financial liability that are required by the interest rate benchmark reform (IBOR reform) by updating the effective interest rate. We consider these as being the two most important elements of the proposals.

Given the speed at which market participants are choosing, or being required, to switch to new interest rate benchmarks, we encourage the FRC to act swiftly in finalising the amendments arising from this FRED.

Responses to the specific questions raised in FRED 74 are included in the full comment letter.

The Board achieved consensus on all issues with the exception of annual cohorts, with nine Board members voting in favour of the cohorts meeting the endorsement criteria and seven members disagreeing. Comments on the DEA are requested by 29 January 2021. Please click to access the different consultation documents and appendices through the press release on the EFRAG website.

EFRAG has also updated its endorsement status report to the issuance of the positive draft endorsement advice.

After an introductory assessment of the current situation, which stresses the growing and urgent demand and the need for consistency in reporting and comparable information, the consultation paper sets out high-level options for the IFRS Foundation. These options are explained as maintaining the status quo, facilitating existing initiatives, or creating a Sustainability Standards Board (SSB) and becoming a standard-setter working with existing initiatives and building upon their work.

For establishing the possible new sustainability standards board the existing IFRS Foundation’s three-tier governance structure could be leveraged. The new board could operate alongside the International Accounting Standards Board (IASB) under the existing governance structure, build on existing developments and collaborate with other bodies and initiatives in sustainability, focusing initially on climate-related matters. However, the consultation paper sets out critical success factors for the creation of an SSB. These include:

• Achieving sufficient support from public authorities and market participants;
• working with regional initiatives to achieve global consistency and reduce complexity in the reporting landscape;
• achieving the appropriate level of funding; and
• ensuring the current mission of the IFRS Foundation is not compromised.

If respondents believe that the SSB could and should be established by the IFRS Foundation, the discussion paper suggests a ‘climate-first’ approach, proposes that the SSB would initially focus its efforts on the sustainability information most relevant to investors and other market participants and could consider how to broaden its scope as it proceeds with its work, and and discusses assurance aspects.

The consultation paper includes ten questions to respondents and encourages stakeholders to raise any other comment or relevant matters for the consideration of the Trustees. Comments on the consultation are requested by 31 December 2020.

Please click for the following additional information:

• Press release
• Consultation paper
• Need to know — Ground-breaking proposal from IFRS Foundation points to global standards for sustainability reporting

In addition, the CDP, Climate Disclosure Standards Board, Global Reporting Initiative, International Integrated Reporting Council and Sustainability Accounting Standards Board have issued an open letter to Erik Thedéen, Chair of the Sustainable Finance Task Force of the International Organization of Securities Commissions, on the need to work together to meet the needs of the capital markets.  Mr. Thedéen acknowledged the letter and the IFRS Foundation consultation in a speech stating that: "While these initiatives are currently running in parallel, I expect them to come together."

IFAC has issued a press release, applauding both, the IFRS Foundation consultation and the open letter.

We agree that the IFRS Interpretations Committee’s conclusions regarding supply chain financing arrangements reflect the requirements of IFRS Standards and that the outcome of applying these requirements will lead to different presentations in the statement of financial position, within trade payables, other payables or in other financial liabilities depending on the terms of the arrangement and the relative similarity of the nature and function of the liability under the arrangement with more conventional trade payables. However, we are concerned that users are not benefiting from a fuller understanding of these arrangements given the lack of specific disclosures required by IFRS 7. The Board may wish to consider adding to its agenda a project to improve disclosures in this area, potentially through illustrative examples, due to the increasing prevalence of alternative financing models such as these, and the move away from obtaining finance from a broad range of suppliers to a more concentrated approach with a single or small number of financial institutions or other funding vehicles.

Click to view the comment letter and Deloitte's notes from the June 2020 IFRS Interpretations Committee meeting.