IFAC calls for the IFRS Foundation to create an International Sustainability Standards Board (ISSB). This new Board could leverage the independence and success of IFRS governance to develop global standards and rationalise the current fragmented ecosystem. As with the IASB, clear support from global institutions like IOSCO and appropriate funding would be critical to success. Under the structure the IFAC envisions, the IASB would remain focused on financial reporting standards and coordinate with the ISSB to avoid overlaps and gaps.

The ISSB itself would adopt a “building blocks” approach, working with and leveraging the expertise and disclosure requirements of leading initiatives, including CDP, CDSB, GRI, IIRC, and SASB. These building blocks would consist of:

• Requirements for material non-financial information focused on company performance, risk profile, economic decisions and enterprise value creation.
• Collaboration with respect to reporting requirements designed to address broader, material sustainable development and company impacts on economy, environment, and people. These requirements may ultimately be incorporated or endorsed into ISSB standards.
• Supplemental jurisdictional requirements to support local public accountability.

Financial and non-financial information would be connected through a common conceptual framework.

The IFAC notes that the time for a global solution is now — to answer the demand from investors, policymakers and other stakeholders for a reporting system that delivers consistent, comparable, reliable, and assurable information relevant to enterprise value creation, sustainable development and evolving expectations. A fragmented approach would perpetuate inefficiency, increased cost, and a lack of trust. Therefore, the IFAC argues, that important work that is currently underway should be continued, but with the aim of ultimately contributing to the emerging global system.

Please click to access Enhancing Corporate Reporting: The Way Forward on the IFAC website.

While GRI, SASB, CDP and CDSB set the frameworks and standards for sustainability disclosure, including climate-related reporting, along with the TCFD recommendations, the IIRC provides the integrated reporting framework that connects sustainability disclosure to reporting on financial and other capitals.

These organisations have now declared their intent to provide:

• joint market guidance on how the frameworks and standards can be applied in a complementary and additive way;
• a joint vision of how these elements could complement financial generally accepted accounting principles (financial GAAP) and serve as a natural starting point for progress towards a more coherent, comprehensive corporate reporting system; and
• joint commitment to drive toward this goal, through an ongoing programme of deeper collaboration between them, and a stated willingness to engage closely with other interested stakeholders.

The “big picture” view of the relationship between the standards and frameworks, including their relationship to the IASB and FASB standards, foresees an approach to standard-setting that results in a globally agreed set of sustainability topics and related disclosure requirements under a rigorous and ongoing standard-setting due processes that will result in high-quality global standards.

The comprehensive corporate reporting system the paper envisions would then see three nested sets of reporting:

• Reporting on matters that reflect the organisation’s significant impacts on the economy, environment and people;
• reporting on the sub-set of sustainability topics that are material for enterprise value creation; and
• reporting that is already reflected in the financial accounts.

Reporting already reflected in the annual accounts would continue to be the remit of IASB and FASB and the subset of sustainability topics that are material for enterprise value creation would be covered by CDSB and SASB. Both sets would be connected by an overarching integrated reporting framework. GRI Standards would enable companies to report sustainability information that describes their significant impacts on the economy, environment, or people, and hence their contributions towards sustainable development and could also be used to describe impacts on the company. CDP would fill the crucial role of technology in reporting and enable access for all stakeholders to corporate performance on sustainability topics. The standards rsulting from this comprehensive reporting system would enable companies to collect information about performance on a given sustainability topic once but provide relevant information to different users through appropriate communication channels.

Please click to access the joint press release and statement of intent (external link).

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

IFRS 10 Consolidated Financial Statements and IFRS 16 Leases—Sale and Leaseback in a Corporate Wrapper: The Committee received a submission asking about the applicability of the sale and leaseback requirements in IFRS 16 to a 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. The submitter asked as to how the gain or loss on disposal should be recognised. The staff concluded that the principles and requirements in IFRS 10 and IFRS 16 provide an adequate basis to determine that the transaction is a sale and leaseback and that the requirements in IFRS 16 apply. On that basis the staff recommend that the Committee not add the matter to its agenda.

IAS 12 Income Taxes—Deferred Tax arising from a Single Transaction: In July 2019, the Board published Exposure Draft ED/2019/5 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).The staff analysed the respondents' feedback to the ED and will present the preliminary proposed recommendations to the Committee for advice.

Work in progress: The staff are analysing requests related to the hedge of variability in cash flows in real terms and configuration or customisation costs in a cloud computing arrangement.

The full agenda for the meeting can be found here. We will update this page for any changes to the agenda and our Deloitte pre-meeting summaries for the meeting as they become available.

We are broadly supportive of the proposed amendments although we have some minor comments and drafting suggestions.  We encourage the FRC to finalise these amendments as soon as possible so that businesses can take prompt advantage of the relief provided.

A full response to all questions raised in the invitation to comment are contained within the full comment letter.

We agree with the proposed amendments and concur with the FRC’s conclusions in the impact assessment. 

The full response is contained within the full comment letter below. The full response is contained within the full comment letter below. The full response is contained within the full comment letter. full response is contained within the full comment letter below. The full response is contained within the full comment letter below. The full response is contained within the full comment letter below. 

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. The actual letter containing the DEA is not expected until October as questions to constituents still need to be agreed. Stakeholders will be given four months to comment on the DEA. A final advice will be aimed for by the end of March 2021.

As part of the preparation for the end of the Transition Period, work is being undertaken to ensure the UK is ready to undertake adoption of the Amendments if EU adoption does not occur in December 2020 (as the UK leaves the EU at the end of the transition period on 31 December 2020).

The FRC welcomes stakeholders’ views to inform its recommendation to the BEIS Secretary of State to adopt the Amendments in the UK.

The FRCs initial assessment is that:

• the Amendments meet the criterion of relevance, reliability, comparability and understandability required of the financial information needed for making economic decisions and assessing the stewardship of management, as required by SI 2019/685 (see Regulation 7(1)(c)); and
• application of the Amendments are not contrary to the principle that an entity’s accounts/consolidated accounts must give a true and fair view as required by SI 2019/685 (see Regulation 7(1)(a)).

Additionally the FRC initially concludes that the Amendments will improve the quality of financial reporting, that the benefits of the Amendments are likely to outweigh the costs and that users are likely to benefit from the Amendments.

The press release, Invitation to Comment and draft UK Endorsement Criteria Assessment are available on the FRC website. 

Comments are requested by close of business on Monday 28 September 2020. 

Participants of the field-test were asked to apply the IASB's proposals to their financial statements and answer a questionnaire from EFRAG and the IASB. The results were then discussed in the workshop.

Please click for additional information and the report from the workshop on the EFRAG website.

Results from a similar workshop with corporates were released in August 2020.

The update reports on the EFRAG Board webcast meeting on 24 August and the EFRAG TEG webcast meeting on 24 August.  The publication also covers the activities of the European Reporting Lab.

The update also lists EFRAG publications issued in August including:

• EFRAG's draft endorsement advice on Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16). 
• EFRAG's summary report around feedback from the field-test workshop conducted on the IASB Exposure Draft General Presentation and Disclosures.

Please click to download the August EFRAG Update from the EFRAG website.fThe update reports on the EFRAG Board conference call on 6 July and webcast meeting on 16 July, the EFRAG TEG webcast meeting on 1-2 July, 8 July and a conference call on 6 July and the EFRAG TEG and EFRAG CFSS webcast meeting on 1 July.  The publication also covers the activities of the European Reporting Lab.fdThe update reports on the EFRAG Board webcast meeting on 24 August and the EFRAG TEG webcast meeting on 24 August.  The publication also covers the activities of the European Reporting Lab.

The task force will be chaired by Patrick de Cambourg, President of the French standard-setter ANC.

Please click for a list of all members in the press release on the EFRAG website.