The publication discusses the new environmental, social, and governance (ESG) disclosure framework developed by the Big Four accounting firms. The framework includes a universal set of metrics and recommended disclosures intended to lead to a more comprehensive global corporate reporting system. The framework divides disclosures into four pillars — principles of governance, planet, people, and prosperity — that serve as the foundation for ESG reporting standards.

Please click to access the report and a corresponding press release on the WEF website.

In addition, see Deloitte's Purpose-driven Business Reporting in Focus — Progress towards a comprehensive corporate reporting system.

Central to the letter is that materiality of disclosures should be assessed according to investor concerns.  The letter states:

"We therefore confirm the investor view that climate-related risks are material factors that should be reflected appropriately in financial statements"

The letter concludes by asking:

• "That companies apply the IASB opinion in the letter and the spirit, including showing the key assumptions that have been made with regard to climate-related risks.
• That auditors only sign off financial statements which are consistent with the IASB opinion in the letter and the spirit, which include showing the key assumptions that have been made with regard to climate-related risks.
• That regulators and civil society work with us in enforcing and encouraging these actions.
• That henceforward the assumptions made by companies in preparing financial statements under International Financial Reporting Standards be compatible with the Paris Agreement".

The full letter is available on the Principles for Responsible Investment (PRI) website.  Our news item on IFRS Standards and climate-related disclosures is available here. 

The UKEB has been set up to endorse and adopt new or amended international accounting standards on behalf of the UK, when the transition Period comes to an end.  The UKEB will ensure that the UK can continue to play a key role in the global development of these standards.  

Further information is included in the press release available on the Government website. 

The new UK Stewardship Code took effect for reporting years beginning on or after 1 January 2020. In order to support prospective signatories in meeting the higher expectations set by the Code, the FRC will publish a 'Review of Early Reporting'. The Review will detail the expectations for reporting, identify effective examples and highlight where reporting needs to improve. 

In order to coincide with the launch of the review the FRC will host a webinar on the morning of the 30th September at 11am. The webinar will include an introduction from Mark Babington, FRC’s Executive Director of Regulatory Standards, and a presentation of the key findings from Claudia Chapman, Head of Stewardship. This will be a followed by a Q&A session which will give attendees the opportunity to ask questions about applying and reporting on the Code.

Further details and how to register for the event are available on the FRC website. 

The guidance is aimed at companies applying FRS 102 and identifies some key areas where entities might need to consider the impact of COVID-19 when preparing disclosures within their annual report and accounts. It is not intended as a disclosure checklist but rather to highlight factors to consider in the current environment.  The guidance also refers to another ICAEW Financial Reporting Faculty checklist for guidance on recognition and measurement.  

The guidance covers a number of areas of disclosure including:

• Accounting policies
• Significant judgements
• Key sources of estimate uncertainty
• Changes in estimates
• Fair value of investment property
• Going concern
• Post balance-sheet events
• Impairment of assets
• Government grants
• Provisions
• Insurance policies
• Termination benefits

Additionally the guidance addresses the presentation requirements for material items and alternative performance measures and factors to consider when preparing the strategic report.

A press release and the guidance is available on the ICAEW website.

New Matter

IFRS 10 Consolidated Financial Statements and IFRS 16 Leases — Sale and Leaseback in a Corporate Wrapper: The Committee decided not to add the matter to its agenda but to publish a tentative agenda decision to analyse the application of both IFRS 10 and IFRS 16 to the transaction in which an entity sells its equity interest in a subsidiary that holds only a real estate asset and then leases that real estate asset back. Most of the Committee members agreed with the conclusion but expressed their concerns on various aspect of the analysis and suggested amendments in wordings to the agenda decision.

Interpretations Committee Advice

IAS 12 Income Taxes — Deferred Tax arising from a Single Transaction: Most of the Committee members agreed with the preliminary proposed recommendations by the Committee to the Board's Exposure Draft ED/2019/5 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12). Some gave opinions on certain areas for the staff's consideration for further recommendation or clarification.  

More In­for­ma­tion

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

Maintenance and Consistent Application — Lease Liability in a Sale and Leaseback — Sweep Issue: The staff are drafting the exposure draft (ED) to amend IFRS 16. They have identified matters that the Board needs to consider. They recommend that the ED specify that when measuring the ROU asset and lease liability arising from a sale and leaseback, a seller-lessee determines the proportion of the asset sold that relates to the right of use it retains by comparing the present value of the expected payments for the lease to the fair value of the asset sold.  They also recommend that the Board modify its tentative proposed approach for how a seller-lessee subsequently measures the lease liability arising from the leaseback such that the seller-lessee would reduce the carrying amount of the lease liability to reflect expected payments for the lease at market rates.

Business Combinations under Common Control: The BCUCC Discussion Paper is expected to be published in November 2020. The staff recommend a comment period of 120 days.

Management Commentary: The staff recommend that the proposed revised practice statement remain a non-binding framework for the preparation of management commentary; require management commentary to include an unqualified statement of compliance with the Practice Statement if it complies with all the requirements in the Practice Statement or explain which requirements it does not comply with if it does not comply; retain the requirement that when management commentary relates to financial statements, an entity should either make the financial statements available with the management commentary or identify in the management commentary the financial statements to which it relates; and require an entity to specify the date when its management commentary is authorised for issue and to reflect any material information about events occurring after the end of the reporting period and before the date when the management commentary was authorised for issue.

Extractive activities: The staff papers summarise the results of outreach to determine what problems, if any, entities with extractive activities have applying IFRS Standards and whether the primary users of financial statements of entities with extractive activities are obtaining all the information they need for these entities.

Rate-regulated Activities: The staff are drafting the ED on regulatory assets and liabilities. They have identified matters that the Board needs to consider, including the definition of a regulatory asset and regulatory liability, regulatory returns on assets not yet available for use. Additionally, the staff recommend extending the comment period to 180 days.

Board work plan update: The staff will give the Board an oral update on the work plan.

More in­for­ma­tion

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

The errata affect the numbering of paragraphs in IFRS 9 Financial instruments.

Editorial corrections and errata do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The list of errata can be viewed on the editorial corrections page of the IASB's website.

The scope of the project will include:

• exploring whether and how companies’ risk identification, risk management and scenario planning processes are evolving and how this is impacting reporting and disclosure.
• determining whether the time horizons utilised in scenario planning have changed.
• considering how companies communicate uncertainty in their disclosures.
• discussing which areas of reporting are most challenging for companies.
• exploring examples of risks and related disclosures where investor focus has been heightened by the current pandemic (for example, supply chain risk, existential risk/viability of business model).
• analysing how investors use this information in their decision-making process and identify whether reporting meets investor needs;
• discussing what types of disclosures would be most useful in interim reports; and
• highlighting best practice in current company reporting.

A press release and further information are available on the FRC website.

The purpose is to collect input on the proposals in the IASB's discussion paper DP/2020/1 Business Combinations — Disclosures, Goodwill and Impairment and on EFRAG’s suggestions included in its draft comment letter.

Responses on the survey are requested by 26 October 2020. Please click for more information and access to the survey on the EFRAG website.

Please note that the deadline for responses has been extended to 13 November 2020.